The return of applications without consideration when applying rehabilitation procedures to the debtor or declaring him bankrupt

The provisions of articles 40-45, 46-47 of the Law define the procedure for filing an application to the court (of the debtor, creditors, prosecutor) for the application of a rehabilitation procedure against the debtor or declaring him bankrupt.

Applications are submitted mainly in the form of an electronic document.

Article 45-1 of the Law provides for the return of an application without consideration in case of non-compliance with its requirements provided for in Articles 41, 42, 44, 45 of this Law.

A similar rule is provided for in paragraph 5 of the NP.

As the study of the cases showed, the reasons for the return of applications were:

- non-payment of the state duty or its payment by an improper person;

- the absence of a decision by the founder (participant), which was the basis for filing an application for bankruptcy with the court;

- the absence of information in the creditor's application about the person appointed interim manager;

- lack of an agreement on the exercise of the powers of the interim administrator;

- lack of information about the presence or absence of property in the debtor's branches;

- lack of information about sending a copy of the application and the documents attached to it to the authorized body;

- lack of proper powers of representatives to sign statements.

In some cases, the reason for the return of applications from the creditor -tax authority was the restriction established by paragraph 1 of the Resolution of the Government of the Republic of Kazakhstan dated April 23, 2021 No. 265 "On suspension of initiation of bankruptcy proceedings" on suspension until July 1, 2021 of the submission to the court by creditors represented by state bodies and subjects of the quasi-public sector of applications for declaring bankrupt legal entities and Sole proprietor.

When returning applications, the courts also applied the norms of Article 152 of the CPC, which defines the grounds for returning a claim.

Problematic issues

1. Application of the provisions of Article 45-1 of the Law and Articles 152, 279 of the CPC.

Thus, a statement of claim may be returned on the grounds provided for in Article 152 of the CPC, and left without consideration on the grounds set out in Article 279 of the CPC.

Article 279 of the CPC does not provide for leaving a claim without consideration due to non-compliance with the requirements for its form and content.

Article 45-1 of the Law provides for the simultaneous "return of an application without consideration," and therefore the courts applied this rule both when returning an application and when leaving it without consideration.

2. The list of judicial acts adopted by the court in the case of rehabilitation and bankruptcy listed in article 55 of the Law does not provide for the issuance of a ruling on leaving the application without consideration.

The issuance of such a ruling is provided for in paragraph 2 of Article 54 of the Law (in case of failure to appear at the court hearing of the creditor who submitted the application). The same rule states that in the event of the debtor's failure to appear, the court issues a ruling on compulsory summons.

According to paragraph 4 of article 38 of the Law, an application for bankruptcy filed by a debtor, a rehabilitation manager, cannot be withdrawn without an appropriate court decision. The application of the creditor (creditors) and the prosecutor may be withdrawn by them before making a decision to declare the debtor bankrupt.

It seems unclear which "relevant court decision" we are talking about – an interim judicial act or a final decision on the merits. A literal interpretation of these provisions of the Law leads to the conclusion that the debtor, who is in the status of an applicant, cannot withdraw the application submitted by him and the case must be considered with the mandatory participation of the debtor, regardless of who filed the application.

In practice, when considering cases based on applications from tax authorities, the issue of notifying the debtor and bringing him is difficult, since the debtors do not voluntarily appear, it is impossible to establish their location and obtain the required documents.

In such cases, the courts consider cases without the participation of the debtor and without reviewing any documents. At the same time, there is no information about taking measures to forcibly bring in the case file.

These contradictions should be eliminated by making changes to the wording of the articles of the Law and clarifying the application of controversial norms in the NP.

The practice of returning applications without consideration

1) On March 24, 2022, Sevstroyterminal LLP filed for bankruptcy in court. The court ruling left the application without consideration.

It was established that the only participant and director of Khlamov V.V. LLP died on October 6, 2015, respectively, did not accept or sign a decision to apply to the court for declaring the LLP bankrupt, did not issue a power of attorney dated March 2, 2022 to a lawyer to represent the interests of the Partnership, did not issue an order dated March 2, 2022 on the appointment of Acting Director of Sevstroyterminal LLP - Kataeva A.E.

The Council of Ministers of the North Kazakhstan region indicated that Kataeva A.E. had no right to conclude an agreement on behalf of this LLP on the exercise of the powers of the interim manager with Huseynov K.D., and the lawyer is not a person authorized to represent the interests of Sevstroyterminal LLP in court.

2) The rehabilitation manager of Firm Builder LLP Tugaev N.N. applied to the court for termination of the rehabilitation procedure and recognition as bankrupt.

By the decision of the Council of Economic and Social Council of the North Kazakhstan region dated January 22, 2020, the application was left without consideration due to the fact that the rehabilitation manager did not attach evidence to the application about sending the application and the documents attached to it to the authorized body, and during the preparation it is not possible to eliminate the above shortcoming, since Tugaev N.N. died after submitting the application to the court and currently there is no person who can act as a representative of Firm Builder LLP.

The ruling was overturned by the appellate instance, and the case was sent for a new hearing.

Footing:

In cases where applying to the court for bankruptcy is mandatory for the debtor in accordance with the Law and the necessary documents are not attached to the application, such an application is accepted by the court for production, and the missing documents are claimed by the court in order to prepare the case for trial.

It was established that on January 24, 2019, the authorized body received the minutes of the creditors' meeting with the attachment of the materials considered at the creditors' meeting, including the final report. These documents are attached to the application submitted by the debtor. The death of the rehabilitation manager is not a reason to return the application without consideration.

The board found the conclusions of the court of first instance on the impossibility of eliminating the shortcomings of the submitted application at the stage of preparing the case to be erroneous.

3) By the decision of the Council of Economic and Social Council of the city of Nur-Sultan dated June 28, 2022, the application of R.M. Badurgova (salary creditor) for declaring the LLP "Medet-Real Estate" bankrupt according to her application was left without consideration.

The only participant in the debtor and its director, Badurgov I.R., asked the court to cancel the ruling, referring to the consideration of the case without his participation and notification, since he is also a wage creditor.

By the ruling of the appeals board dated August 10, 2022, the judicial act was left unchanged due to the fact that the appellant was reliably informed about the consideration of the case at the request of R.S. Badurgova. A representative of LLP by proxy, signed by I.R. Badurgov, participated in the case and provided explanations.

In addition, the contested definition does not prevent Badurgov I.R. from applying to the court on his own to declare the LLP bankrupt.

4) JSC "National Company Kazakhstan Temir Zholy" applied to the court for declaring KazTransNabsErvice LLP bankrupt.

By the decision of the Council of Economic and Social Council of the city of Nur-Sultan dated June 29, 2022, the application was returned without consideration due to the fact that the creditor's application does not specify the data of the interim manager with whom the agreement on the exercise of the powers of the interim manager was concluded, and the agreement itself is not attached.

The Court of Appeal did not agree with these conclusions, since if the applicant is a creditor of taxes and customs payments or a state body or a legal entity with the participation of the state, the choice of a temporary administrator is carried out in accordance with the procedure determined by the authorized body (Articles 15, 44 of the Law).

In accordance with the Company's Charter, the sole shareholder is JSC National Welfare Fund Samruk-Kazyna, which is founded by the Government of the Republic of Kazakhstan.

5) The company "GUDAZ RAHMANI LTD" applied to the court for declaring "Tungri" LLP bankrupt.

By the definition of the Council of Economic and Social Council of Kostanay region dated February 3, 2022, the application was returned to the applicant on the basis of paragraph 3 of Article 45-1 of the Law, since there was no agreement in the materials on the exercise of the powers of the interim administrator concluded between the creditor and the person authorized to carry out the activities of the administrator, the obligation of which is expressly provided for by law.

6) MEGASTROY-SEVER LLP has applied for a rehabilitation procedure.

In violation of paragraph 1 of Article 41 of the Law, the application was signed by a representative under a power of attorney, and not by the head of the debtor - a legal entity or a person replacing him in accordance with the constituent documents.

By virtue of subparagraph 2) of paragraph 5 of Article 42 of the Law, a list of all creditors and debtors with their legal address is not attached to the application.

By the definition of the Council of Economic and Social Council of Kostanay region dated January 6, 2021, the application was returned to the applicant with reference to paragraph 1 of Article 45-1 of the Law, subparagraph 3) of paragraph 1 of Article 152 of the CPC.

7) Stroykomplekt LTD.RV LLP applied to the court for a rehabilitation procedure.

By the definition of the Council of Economic and Social Council of Kostanay region, the application was left without consideration, since the applicant did not fulfill the requirements of paragraph 2 of Article 41 of the Law regarding sending a copy of the application and the documents attached to it to the authorized body.

At the preliminary court hearing, the representative of the authorized body explained that the application had not submitted the documents attached to it. The creditor's representative supported the request to leave the application without consideration.

8) By the definition of the Council of Economic Cooperation of Kostanay region dated October 15, 2021, the application of JSC "Problem Loans Fund" for declaring MSM-MANEGEMENT LLP bankrupt was left without consideration due to the submission of an incomplete list of documents.

By the ruling of the appeal dated December 23, 2021, the ruling was canceled with a referral for consideration on the merits due to the fact that a refund on this basis is possible at the stage of acceptance of the application.         In this case, the application was accepted by the court and was under consideration. In addition, the appeals board pointed out that this action of the court of first instance contradicts the rules of Article 279 of the CPC.

Summary of judicial practice in the application of legislation on rehabilitation and bankruptcy in cases considered by the courts for the period 2020-2021 and the 1st half of 2022.

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