Article 7. Recognition of the debtor's transactions as invalid and return of property The Law on Rehabilitation and Bankruptcy

Home / RLA / Article 7. Recognition of the debtor's transactions as invalid and return of property The Law on Rehabilitation and Bankruptcy

1. Transactions are recognized as invalid if they were made by the debtor or a person authorized by him within three years prior to the initiation of rehabilitation and (or) bankruptcy proceedings, unless otherwise provided by this Law, if there are grounds provided for by the civil legislation of the Republic of Kazakhstan and this Law.

If bankruptcy proceedings are applied to the debtor as a result of the termination of the rehabilitation procedure, the period provided for in part one of this paragraph shall be calculated from the date of entry into force of the court's decision on the application of the rehabilitation procedure.

2. The grounds for invalidity of transactions, except as provided for by the Civil Code of the Republic of Kazakhstan, are:

1) the price of the completed transaction and (or) other conditions differ significantly for the worse for the debtor from the price and (or) other conditions under which similar transactions are carried out in comparable circumstances.;

2) the transaction does not comply with the debtor's activities, limited by the laws of the Republic of Kazakhstan, constituent documents, or committed in violation of the competence defined by the charter;

3) the property has been transferred (including for temporary use) free of charge or at a price significantly different for the worse for the debtor from the price of an identical or similar product under comparable economic conditions, or without grounds for transfer to the detriment of creditors;

4) if the transaction, completed within six months prior to the initiation of the rehabilitation and (or) bankruptcy proceedings, resulted in the preferential satisfaction of the claims of some creditors over others;

5) contracts for the donation of the debtor's property, if such a transaction differs significantly from transactions concluded one year before the initiation of rehabilitation or bankruptcy proceedings.;

6) a transaction made without the intention to create appropriate legal consequences for such a transaction, to the detriment of the interests of creditors.

3. Upon detection of transactions made under the circumstances specified in paragraphs 1 and 2 of this article, the administrator is obliged, including at the request of the creditor who identified the transaction, to apply to the court within ten working days from the date of detection with an application for invalidation of such transactions.

4. If the transaction is declared invalid, the defendant is obliged to return everything received under the transaction, if it is impossible to return in kind, to reimburse the cost of the property to be returned, the cost of using the property, work performed or services rendered in money, unless other consequences of the invalidity of the transaction are provided for by the Civil Code of the Republic of Kazakhstan.

In this case, the defendant acquires the right of claim against the debtor, which is subject to satisfaction in accordance with paragraph 5 of Article 100 of this Law.

5. If it is impossible to return the property in the cases provided for in this article, or in the case of gratuitous transfer of property in connection with its loss, damage or subsequent acquisition in good faith by third parties, the original purchasers of the claimed property shall be liable to the debtor for damages incurred in this regard within the value of the property lost, damaged or acquired in good faith by third parties.

6. If it is impossible for the original acquirer to recover the value of the property, the person who made the decision to alienate the debtor's property must be held vicariously liable in court.

7. The requirements of this article do not apply to transactions:

1) project financing, securitization;

2) concluded in the trading system of the stock exchange by the method of open trading;

3) committed by the debtor in the framework of ordinary commercial transactions, the terms of which do not significantly differ from the terms of similar transactions concluded by the debtor in the course of his entrepreneurial activity during the three years prior to the initiation of rehabilitation and (or) bankruptcy proceedings.

8. The provisions of sub-paragraphs 1), 2), 3) and 4) of paragraph 2 of this Article shall not apply to the transaction(s) under the general financial agreement, except in the following cases:

1) the transaction (transactions) under the general financial agreement was completed after the initiation of rehabilitation and (or) bankruptcy proceedings or within one month prior to the date of initiation of rehabilitation and (or) bankruptcy proceedings;

2) the transaction (transactions) under the general financial agreement was completed within one month prior to the date of revocation of the debtor's license to engage in activities in the financial sector and (or) activities related to the concentration of financial resources;

3) the transaction (transactions) under the general financial agreement was completed within six months prior to the date of initiation of the rehabilitation and (or) bankruptcy proceedings with or in the interest of the debtor's affiliated person;

4) the transaction (transactions) under the general financial agreement was completed (completed) within six months prior to the date of initiation of the rehabilitation and (or) bankruptcy proceedings or the date of revocation of the debtor's license to engage in activities in the financial sector and (or) activities related to the concentration of financial resources with a person who knew (or should have known) about the signs of the debtor's temporary insolvency;

5) the parties to the transaction (transactions) under the general financial agreement have been changed (except for the change of parties as a result of universal succession) in one of the following cases:

after the initiation of rehabilitation and/or bankruptcy proceedings, or within one month prior to the date of initiation of rehabilitation and/or bankruptcy proceedings;

within one month prior to the date of revocation of the debtor's license to engage in activities in the financial sector and (or) activities related to the concentration of financial resources;

within six months prior to the date of initiation of the rehabilitation and/or bankruptcy proceedings with the debtor's affiliated person;

within six months prior to the date of initiation of the rehabilitation and/or bankruptcy proceedings or the date of revocation of the debtor's license to engage in financial activities and /or activities related to the concentration of financial resources with a person who knew (or should have known) about the signs of temporary insolvency of the debtor.

9. The invalidity of one or more transactions under the general financial agreement does not entail the invalidity of the general financial agreement itself and the remaining transactions under the general financial agreement, if there are no grounds for invalidating the general financial agreement and the remaining transactions.

If one or more transactions under the general financial agreement are declared invalid after the net obligation (net claim) has been determined, the net obligation (net claim) is subject to recalculation by the party to the transaction that determined the net obligation (net claim) by excluding from it the results of the transaction or transactions that were declared invalid..

The Law of the Republic of Kazakhstan dated March 7, 2014 No. 176-V SAM.

This Law regulates public relations arising from the debtor's inability to satisfy creditors' claims in full, establishes the grounds for applying debt restructuring procedures, rehabilitation procedures and declaring the debtor bankrupt, liquidating the debtor without initiating bankruptcy proceedings, and also defines the procedure and conditions for their conduct.

President

Republic of Kazakhstan

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