ASTANA – The Ministry of Finance presented Jan. 10 the draft law on improving rehabilitation and bankruptcy procedures of business entities at the Mazhilis (lower house of Parliament).
Approximately 4,000 business entities are undergoing the bankruptcy procedure and 400 enterprises are in need of rehabilitation
“The number of business entities in difficult financial situations is much more. The current law does not allow an entrepreneur to shut down business in a short time. The rehabilitation and bankruptcy are also complicated procedures. The court rejects bankruptcy, as it cannot provide an objective assessment of the financial condition of the entity. A minor asset is regarded by the court as an opportunity to pay off debts,” said Vice Minister of Finance Kanat Baedilov.
The same refers to the rehabilitation procedure application.
“The court refuses to use rehabilitation procedure as the debtor is solvent or has not proved the availability of resources to restore solvency. The draft law aims to resolve these issues. Its main mission is to simplify the conditions for rehabilitation and bankruptcy procedures and liquidation of inactive debtors,” he said.
The law provides that a legal entity will be declared bankrupt on the basis of a negative balance when liabilities exceed assets. The rehabilitation procedure will be performed on the basis of a positive balance, subject to non-payment, when assets exceed liabilities.
The rehabilitation procedure will also be available to individual entrepreneurs.
The proposed initiatives will increase the rehabilitation and bankruptcy procedures by business entities to 32 percent. The reduction of terms to 20 percent and costs up to 40 percent is expected to positively affect the position of Kazakhstan in the Resolution of Insolvency indicator in the World Bank’s Doing Business rating.