Kazakhstan clarifies important nuance in bankruptcy rules

Tengrinews.kz – The Cassation Court for Civil Cases clarified that the formal ownership of a stake in an LLP is not, in itself, grounds for refusing a Kazakh citizen access to the judicial bankruptcy procedure.
Share in LLP became reason for refusal
Citizen H. applied to the court seeking the application of the judicial bankruptcy procedure.

“The woman, who has a group II disability and suffers from cancer, asked to be declared bankrupt. Her debt amounted to 4.5 million tenge. However, the courts of first and appellate instances refused, citing the fact that the applicant owned a 25.9 percent share in the authorized capital of an LLP,” the court said.

The Cassation Court reached a different conclusion. It turned out that the partnership had effectively not been operating for more than two years, and all of its property was valued at only 103,000 tenge.
The value of the applicant’s share was 26,677 tenge, which was clearly insufficient to repay the debt of 4.5 million tenge. At the same time, the woman received no income from participation in the LLP, and her only source of funds was a disability allowance.

“Based on the circumstances established in the case, it was recognized that the mere existence of a share in a legal entity is not grounds for refusing to apply the judicial bankruptcy procedure. When considering such cases, it is necessary to take into account the real value of the property and the debtor’s actual solvency,” the statement said.

Following the review, the Cassation Court overturned the decisions of the lower courts and applied the judicial bankruptcy procedure to the Kazakhstani woman.