Initiation of bankruptcy procedure in the Republic of Armenia
In everyday life and business environment, there are frequent cases where the person is unable to meet the requirements of the creditors due to lack of monetary means and/or property. In this situation, the debtor can be declared bankrupt (insolvent).
In the Republic of Armenia, the debtor can be declared bankrupt only by court decision. The debtor may voluntarily start bankruptcy procedure (insolvency) by submitting an application for voluntary bankruptcy. The application can be made if the debtor’s liabilities exceed the value of assets in the amount of 1,000,000 AMD or larger size. The property that is not to be distributed as a means of recovery is not included in the value of assets. Under these conditions, the debtor may within two month period apply to the court for recognition of bankruptcy. In the case of legal persons, the liquidation committee shall submit an application for bankruptcy, if the value of the property of that person cannot fully satisfy the claims of creditors.
In the Republic of Armenia, the debtor may be declared bankrupt by way of forced bankruptcy based on creditors’ statements, if the delay was made on payment obligations in excess of 1,000,000 AMD for a period of 60 (sixty) days or more.
The payment obligation is considered to be undisputed if:
- The debtor does not object to it;
- A court decision or sentence confirming this commitment is entered into force;
- Requirements are based on written transactions and the debtor has no reason to oppose them;
- Requirements related to taxes, duties and other mandatory payments, if the debtor cannot prove that it has grounds to object within six months;
- Uncontested part of the claim exceeds 1,000,000 AMD.
Cases of insolvency are considered by judges of courts of general jurisdiction of the Republic of Armenia alone. Declaration of bankruptcy has a high degree of complexity. Lenders should make a statement demanding the recognition of insolvency, as well as pass a number of other documents proving their claims.
In a statement on the recognition of insolvency should be noted:
- The amount of monetary claims;
- Maturity or part thereof;
- Candidacy interim manager or his consent to his election by the Court;
- Other requirements of the RA legislation.
After considering the application the judge may make an order on the adoption of a case or, to refuse to accept a case. The application may be refused if the debtor has a decision on bankruptcy pending, or declaration of bankruptcy is presented against a person who cannot be a debtor. If the required list of documents established by law is filed incorrectly, the documents that must be attached to the application for bankruptcy was made incorrectly, or there are missing documents, the judge may return the statement.
After the decision on the bankruptcy has been issued by a judge, court organizes many other issues, such as, the notification of creditors and public authorities, the appointment of managers or interim managers, prohibition or restrictions on the right to dispose of the debtor’s property, the approval of the financial recovery program (rehabilitation) and other matters.
Before going to court it is strongly advised to resort to the help of a specialist in this field in order to avoid adverse effects. At first glance, it may seem that everything is very simple and one can easily overcome all difficulties. In the sphere of the business turnover of the Republic of Armenia, very often there are cases when a person in an attempt to protect their interests, faces quite unexpected obstacles and even suffers significant financial losses.
To resolve these complex issues, you can confidently contact ‘Vardan Khechyan LLC’. Barrister Khechyan has successfully carried out activities in this field for fifteen years. During that time he took part in the bankruptcy proceedings of a number of large and well-known companies in the Republic of Armenia. We will provide you with a highly qualified legal assistance and will do utmost for the most rapid and effective resolution of the case in your favor.