LAW
OF THE REPUBLIC OF ARMENIA
Adopted on 25 December 2006
ON BANKRUPTCY
CHAPTER 1
GENERAL PROVISIONS
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Article 1. |
Procedure for examination of bankruptcy cases |
1. Examination of bankruptcy cases shall be conducted through the procedure prescribed by the Civil Procedure Code of the Republic of Armenia and this Law.
2. Where this Law defines rules other than those prescribed by the Civil Procedure Code of the Republic of Armenia, the examination of the bankruptcy case shall be conducted under the rules prescribed by this Law.
3. (part repealed by HO-105-N of 17 June 2016)
(Article 1 supplemented, amended by HO-13-N of 22 December 2010, supplemented by HO-235-N of 23 June 2011, amended by HO-105-N of 17 June 2016, HO-294-N of 12 December 2019)
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Article 2. |
Scope of the Law |
1. Any legal or natural person may be a debtor in bankruptcy proceedings as prescribed by this Law, except for:
(a) the Republic of Armenia;
(b) a community;
(c) the Central Bank of the Republic of Armenia;
(d) a bank;
(e) a credit organisation;
(f) an investment company;
(f1) an investment fund manager;
(g) an insurance company;
(g1) a crypto-asset service provider;
(h) a compensation fund established upon the Law of the Republic of Armenia “On compensation for damages caused to life or health of military servicemen while defending the Republic of Armenia”.
The concepts “bank”, “insurance company”, “investment company”, “investment fund manager” or “credit organisation” used in this part, shall not include the bank, insurance company, investment company, investment fund manager or credit organisation having received the authorisation of the Central Bank of the Republic of Armenia to self-liquidate.
2. Rules for insolvency of insurance companies, charitable foundations, investment and pension funds, investment companies, operator of the regulated market, the Central Depository, pawnshops, natural monopolies and entities having a dominant position in the market, as well as non-governmental organisations, and rules for bankruptcy proceedings with their participation as a debtor other than those prescribed by this Law, may be prescribed by law.
3. The provisions of this Law shall apply to insolvency (bankruptcy) relations with the participation of foreign citizens or stateless persons as a debtor, unless otherwise provided for by the international treaties of the Republic of Armenia.
4. Judgments (decisions) on insolvency (bankruptcy) cases of the courts of foreign states shall be recognised in the Republic of Armenia in compliance with the international treaties of the Republic of Armenia, and in case of their absence — on reciprocity principle.
5. Insolvency (bankruptcy) relations of banks, credit organisations, investment companies, crypto-asset service providers, investment fund managers and insurance companies shall be regulated by the Law of the Republic of Armenia “On bankruptcy of banks, credit organisations, investment companies, crypto-asset service providers, investment fund managers and insurance companies”.
(Article 2 supplemented by HO-201-N of 11 October 2007, HO-108-N of 25 May 2008, supplemented, amended by HO-256-N of 22 December 2010, supplemented by HO-256-N of 15 December 2016, amended by HO-294-N of 12 December 2019, supplemented by HO-178-N of 29 May 2025)
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Article 3. |
Grounds for declaring the debtor bankrupt and characteristics of insolvency |
1. The debtor may be declared bankrupt by a judgment of the court, on own initiative (application for voluntary bankruptcy) or upon the request of the creditor (application for involuntary bankruptcy), where the debtor is insolvent.
2. The debtor may be declared bankrupt by a judgment of the court:
(1) on the basis of an application on involuntary bankruptcy, where the debtor has made a default in payment— for a term of ninety days or more — of indisputable payment liabilities exceeding the two thousand-fold of the minimum salary prescribed by law, and the indicated default continues at the moment of rendering the judgement (actual insolvency). A payment liability shall be indisputable, where the debtor does not object to it, or where the debtor objects to the mentioned liability, but:
(a) the payment liability is recognised by a judgment or criminal judgment having entered into legal force, and the offset is not possible;
(b) the claim is based on a written transaction, and the debtor fails to prove that he or she possesses sufficient grounds for objecting to the given claim (including the offset of the claim);
(c) the claim arises from the obligation of the debtor to pay taxes, duties, other fees prescribed by law, and the debtor fails to prove that he or she possesses sufficient grounds for objecting to the given claim (including the offset of the claim);
(d) the undisputed part of the claim exceeds two thousand-fold of the minimum salary prescribed by law;
(e) the claim arises from the obligation of the natural person to pay taxes and other fees having emerged by virtue of law, and the debtor fails to prove that he or she possesses sufficient grounds for objecting to the claim; moreover, no judgment or criminal judgment or administrative act having become unappealable — having entered into legal force for levying the debt — shall be required;
(2) upon own initiative (application for voluntary bankruptcy), where the liabilities of the debtor exceed the value of assets of the debtor in the amount of two thousand-fold and more of the minimum salary prescribed by law, in case of legal persons — through an assessment made on the basis of accounting rules, and in case of a natural person — through an assessment made on the basis of assessment standards (balance sheet insolvency). In the value of assets shall not be included the value of those assets which may not be subjected to levy execution pursuant to the law.
(2.1) upon own initiative (application for voluntary bankruptcy), where the liabilities of the debtor, subject to fulfilment under public law pecuniary claims, exceed the value of assets of the debtor, in case of legal persons — through an assessment made on the basis of accounting rules, and in case of a natural person or an individual entrepreneur — through an assessment made on the basis of assessment standards (balance sheet insolvency). In the value of assets shall not be included the value of those assets which may not be subject to levy execution pursuant to the law.
(2.2) The debtor shall have the right to apply to court in case of a foreseeable bankruptcy where it is obvious that the grounds for declaring own bankruptcy by the debtor provided for by points 2 and 2.1 of part 2 of this Article, will arise.
4. For the fund manager deemed to be a party to the fund management contract provided for by the Civil Code of the Republic of Armenia, and not deemed to be owner of the assets of that fund, the liabilities assumed by him or her under transactions relating to the fund management shall, within the meaning of this Law, be deemed to be a liability, where, pursuant to the provisions of the Civil Code of the Republic of Armenia, they are subject to fulfilment at his or her expense. Moreover, the liabilities subject to fulfilment at the expense of the fund manager provided for by this part only upon insufficiency of assets of the fund shall be deemed to be a liability, within the meaning of this Law, for that manager only with respect to the insufficient part of the assets of the fund.
5. The fund manager deemed to be a party to the fund management contract provided for by the Civil Code of the Republic of Armenia, and owner of the assets of that fund shall be deemed to be insolvent also in the case where the liabilities not subject to fulfilment at the expense of the assets of the fund (funds) managed by him or her exceed the value of the assets of the fund manager that are not assets of the fund managed by him or her.
(Article 3 supplemented by HO-67-N of 18 May 2010, amended, supplemented by HO-256-N of 22 December 2010, edited, amended by HO-13-N of 22 December 2010, supplemented by HO-253-N of 17 December 2014, HO-105-N of 17 June 2016, amended by HO-298-N of 21 December 2017, HO-445-N of 18 September 2020, supplemented by HO-22-N of 16 January 2024)
(Law HO-445-N of 18 September 2020 has a transitional provision)
(the provision of the Article declared as contradicting the Constitution by Decision SDO-735 of 25 February 2008 has been brought into compliance with the Constitution upon the amendment by Article 2 of Law HO-13-N of 22 December 2010)
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Article 4. |
Subject-matter jurisdiction of bankruptcy cases |
(title edited by HO-294-N of 12 December 2019)
1. Bankruptcy cases shall be conducted by the Bankruptcy Court of the Republic of Armenia (hereinafter referred to as “the Court”). Bankruptcy case shall be conducted by a judge, sitting alone.
2. In case of referring the bankruptcy case to another judge due to re-distribution, the bankruptcy case shall be resumed from the time it has been interrupted.
3. Civil cases involving disputes having arisen with respect to the property included in the estate of the debtor declared bankrupt and his or her rights, the object of secured right belonging to a third party, contracts concluded with the participation of the debtor and creditor, including on securities for performance of liabilities and affecting resolution of the issue of declaring bankrupt or capability to grant the claims of creditors — except for civil cases initiated upon claims filed by the administrator or upon claims filed on the basis of the Law of the Republic of Armenia “On civil forfeiture of illegal assets” — shall be examined by the judge conducting the bankruptcy case as separate civil cases within the scope of the same bankruptcy case (hereinafter referred to as “separate civil cases”). The dispute, specified in this part, having arisen with respect to contracts concluded with participation of the debtor and creditor, including on securities for performance of liabilities, shall be subject to examination at the Bankruptcy Court as a separate civil case irrespective of whether the debtor has been declared bankrupt.
4. Separate civil cases shall be initiated, examined and resolved in the manner prescribed by the Civil Procedure Code of the Republic of Armenia.
4.1. The Bankruptcy Court shall return the statement of claim filed in regard to the bankruptcy proceedings unless the case is subject to examination in the Bankruptcy Court on the grounds prescribed by this Article.
5. The Court shall, upon its decision, refer the cases accepted by the Court for proceedings in violation of rules provided for by part 3 of this Article to the Court of First Instance of General Jurisdiction of the Republic of Armenia (hereinafter referred to as “the Court of General Jurisdiction”) for examination.
6. When the Court receives a civil case from the Court of General Jurisdiction, it shall, within a period of 7 days, take a decision on accepting the case for proceedings or forwarding it to the Chairperson of the Civil Chamber of the Court of Cassation, where it disagrees with the jurisdiction of the case. The Chairperson of the Civil Chamber of the Court of Cassation shall decide on the jurisdiction of the case within a period of five days from the moment the Court of Cassation receives the case. The court chosen by the Chairperson of the Civil Chamber of the Court of Cassation shall be deemed to be the competent court.
7. In case of closure of the bankruptcy case, examination of separate civil cases shall continue, where there are no grounds for terminating the proceedings with regard to those cases or leaving the claim with regard to those cases without consideration.
8. In case there are grounds for self-recusal by a judge conducting the bankruptcy case in regard to a separate civil case, then the separate civil case shall be examined by another judge of the Court.
9. In case the judicial act issued with regard to a bankruptcy case has been quashed (abolished) and returned for new examination after announcing the judgement on declaring the debtor bankrupt, the case (the matter) shall be considered by the same judge of the Court, unless there are grounds for self-recusal.
10. In case a judicial act is announced on quashing the judicial act of the Court with regard to a separate civil case and on sending the case for new examination, the case shall be forwarded to the Court and considered by another judge of the Court.
(Article 4 amended by HO-48-N of 5 February 2009, edited by HO-13-N of 22 December 2010, HO-105-N of 17 June 2016, HO-294-N of 12 December 2019, supplemented by HO-89-N of 3 March 2021, HO-222-N of 26 May 2021, HO-580-N of 23 December 2022, edited by HO-27-N of 9 February 2022)
(Law HO-89-N of 3 March 2021 has a transitional provision)
(Law HO-27-N of 9 February 2022 has a final part and a transitional provision)
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Article 5. |
The obligation of the debtor to apply to the Court |
1. The debtor shall be obliged to apply to the Court for declaring own bankruptcy, where the grounds prescribed by point 2 or point 2.1 of part 2 of Article 3 of this Law are available.
2. The liquidation commission (liquidator) of the debtor legal person shall be obliged to submit an application to the Court for declaring the debtor bankrupt, where during liquidation it is revealed that the value of assets of the legal person undergoing liquidation is insufficient for the full satisfaction of the claims of creditors.
3. In cases provided for by this Article, the application for declaring the debtor bankrupt shall be submitted to the Court no later than within a period of two months after revealing the respective grounds.
(Article 5 edited, amended by HO-13N of 22 December 2010, amended by HO-294-N of 12 December 2019)
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Article 6. |
The obligation of the creditor or other persons to apply to the Court |
1. In case of availability of the grounds for declaring the debtor bankrupt, as prescribed by Article 3 of this Law, with respect to pecuniary liabilities against the budget of the Republic of Armenia and a community budget (including taxes, duties, and other fees), the relevant competent state or local self-government bodies shall be obliged to apply to the Court with a claim to declare the debtor bankrupt in the following cases and within the following time limits:
(a) relevant authorised state body — within six months following the date of revealing the liability in case of delay in payment of taxes, duties, customs duties, other fees or penalties having arisen from administration;
(b) the head of the community — within six months following the date of revealing the liability in case of delay in payment of local duties or mandatory payments, as well as in fulfilment of claims for other pecuniary obligations of the community.
2. Where during the compulsory enforcement of the judgment to levy execution on property, in case of subjecting the entire property of the debtor to levy execution, it is revealed that the property is not sufficient, in the amount of the two thousand-fold or more of the minimum salary prescribed by law, for full redemption of liabilities against the creditor (claimant), or when satisfying the claim of the creditor (claimant) through any enforcement proceedings of the Compulsory Enforcement Service, in case of insufficiency of the property in the amount of the two thousand-fold or more of the minimum salary prescribed by law, the full redemption of liabilities against any other creditor (claimant) in that or other enforcement proceedings will become impossible, then the compulsory enforcement officer shall be obliged to immediately suspend the enforcement proceedings and suggest the creditor and the debtor to file — at the initiative of any one of them — a bankruptcy application with the Court within a period of ninety days.
The decision on suspending the enforcement proceedings on the ground of insufficiency of property shall be published — within two working days — by the Compulsory Enforcement Service as prescribed by the Law of the Republic of Armenia “On public notification via the Internet” and on the relevant electronic web page of the Ministry of Justice of the Republic of Armenia.
Where, after the publication of the decision on suspending the enforcement proceedings, new creditors appear or the already known creditor or the debtor apply to the compulsory enforcement officer with the request not to resume the enforcement proceedings, the compulsory enforcement officer shall suggest them to file a bankruptcy application with the Court, and not resume the enforcement proceedings.
Where, within the time limit prescribed by this part, the debtor or the creditor fails to file a bankruptcy application with the Court, or no new creditors appear, the compulsory enforcement officer shall resume the enforcement proceedings.
Within the meaning of this part, the property shall be deemed to be insufficient where the estimated or starting price of the property under lien and appraised, subject to sale through enforcement proceedings, is lower than the amount of the claim (claims). Costs related to conducting enforcement proceedings and the liability of value added tax, excise tax, turnover tax, environmental tax, arising from the realisation of property (within the meaning of this Law — tax liabilities arising from realisation of property) shall also be calculated in the amount of the claim (claims).
3. In case of failure — by the state bodies indicated in part 1 of this Article — to submit a bankruptcy application within the time limit prescribed, it shall be submitted by the prosecution bodies, as prescribed by this Law, except for the case provided for by sub-point “e” of point 1 of part 2 of Article 3 of this Law, as well as the cases when the decision of the Government on abstaining from submitting an application for declaring bankrupt is available.
4. The state bodies and officials, provided for by this Article, may waive the claim, where, due to fulfilment of the obligation, its amount has decreased from the amount provided for by part 2 of Article 3 of this Law.
5. A bankruptcy application may be not submitted by the state bodies indicated in part 1 of this Article, where the decision of the Government of the Republic of Armenia (hereinafter referred to as “Government”) on abstaining from submitting an application for declaring bankrupt is available.
(Article 6 edited, amended by HO-13-N of 22 December 2010, amended, edited by HO-298-N of 21 December 2017, amended by HO-294-N of 12 December 2019, HO-445-N of 18 September 2020, supplemented by HO-22-N of 16 January 2024)
(Law HO-445-N of 18 September 2020 has a transitional provision)
(Article as amended by Law HO-192-N of 11 April 2024 shall enter into force from 1 January 2026)
(Law HO-192-N of 11 April 2024 has a transitional provision)
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Article 7. |
Personal property liability for failure to comply with the responsibility to apply to the Court |
1. In case of failure by the persons indicated in Article 5 of this Law to submit an application for declaring the debtor bankrupt in cases and within the time limits prescribed in the same Article, the persons having the obligation to submit the application shall bear subsidiary liability against creditors for the liabilities of the debtor which have arisen after the expiry of the time limit prescribed by part 3 of Article 5 of this Law. The same responsibility shall also arise for the compulsory enforcement officer in case of failure to fulfil the obligation prescribed for the latter by Article 6 of this Law.
2. Competent officials of the state and local self-government bodies indicated in Article 6 of this Law, in case of failure to submit an application for declaring the debtor bankrupt in cases and within the time limits prescribed by the same Article, shall bear personal property liability for the damage caused to the Republic of Armenia and the community due to it.
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Article 8. |
Intentional bankruptcy |
Where the debtor has been declared bankrupt by the fault of the person possessing the authorised (share, equity) capital of the debtor or other persons in the position of giving him or her binding instructions to act on or to predetermine his or her decisions, including the executive of the debtor (guiding the activities of the debtor by direct or indirect actions, etc. (intentional bankruptcy)), the founders (participants) of the debtor legal person or those persons shall bear joint and several liability for the obligations of the debtor, in case of insufficiency of the property of the latter.
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Article 9. |
Persons affiliated to the debtor |
1. The following shall be deemed to be affiliated to the debtor:
(a) the legal person which is principal, subsidiary or dependent with respect to the debtor, prescribed by the legislation of the Republic of Armenia;
(b) the executive of the debtor, as well as a member of the board of directors (observer board), a member of the collegial executive body of the debtor, the chief accountant (accountant), as well as the person dismissed from the mentioned positions within the last one year from the moment of submitting a bankruptcy application;
(c) the person possessing 20 and more per cent of the authorised (share, equity) capital of the debtor;
(d) a person or a member of the body in the position of giving binding instructions to the debtor or predetermining his or her decisions.
The person who is in the relations prescribed by part 2 of this Article with the natural persons indicated in this part, and in case of affiliation with a legal person under points “c” or “d” of this part — also the natural person of that legal person holding a position indicated in point “b” of this part, shall also be deemed to be affiliated to the debtor.
2. The spouse of the debtor natural person, persons related to them in two grades of ascending and descending kinship, brother, sister and persons related to them in descending kinship, as well as the brother and sister of the spouse shall be deemed to be affiliated to him or her.
3. Persons affiliated to the administrator and creditors shall be determined as prescribed by parts 1 and 2 of this Article, unless otherwise provided for by this Law.
CHAPTER 2
BANKRUPTCY APPLICATION AND ACCEPTING IT FOR PROCEEDINGS
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Article 10. |
Filing and withdrawing the application |
1. An application on involuntary bankruptcy may be submitted by:
(a) one or several creditors jointly;
(b) (sub-point repealed by HO-13-N of 22 December 2010)
2. The following shall have the right to submit and withdraw an application for voluntary bankruptcy:
(a) on behalf of legal persons — their bodies or representatives acting within the scope of powers reserved to them by law or the charter (hereinafter referred to as “the executive of the debtor”);
(b) on behalf of a natural person — the given natural person or his or her representative.
3. An application submitted jointly by more than one creditor may be withdrawn only upon the written consent of all the creditors having applied.
The application for voluntary bankruptcy may be withdrawn within a period of three days following the entry of the application by the Court. The application for involuntary bankruptcy may be withdrawn within a period of fifteen days following the entry of the application by the Court, and where the application is to be examined in a court session it may be withdrawn prior to commencement of the court session.
4. In case of withdrawal of the application, the bankruptcy proceedings accepted for court proceeding on the basis of the application shall be terminated.
(Article 10 amended, supplemented by HO-13-N of 22 December 2010, edited, amended by HO-294-N of 12 December 2019)
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Article 11. |
Form and content of the application |
1. The application shall be submitted to the Court in the form and with the content provided for by the Civil Procedure Code.
2. The following shall also be indicated in the application:
(a) the amount of the monetary claim of the creditor, the amounts of the debt, damages, and default penalty (fine, penalty) along with relevant calculations;
(b) the time limit for the fulfilment of the liability or a part (parts) thereof;
(c) in case an application for compulsory bankruptcy is submitted, or where an application for voluntary bankruptcy is submitted by a debtor legal person or individual entrepreneur, the recommendation on the candidacy for a temporary administrator or consent to leave the choice to the Court.
2.1. In case the natural person submits an application for voluntary bankruptcy, the debtor shall not recommend candidacy for a temporary administrator; the candidate shall be elected and the administrator shall be appointed as prescribed by parts 6 and 7 of Article 22 of this Law.
3. The following shall also be attached to the application:
(a) state registration data as of no more than thirty days preceding the date of submitting the application for declaring bankrupt the debtor that is a legal person or an individual entrepreneur;
(b) in case of submission of the application by the tax authorities — the latest tax calculation reports submitted by the debtor that is a legal person or an individual entrepreneur;
(c) in case of submitting in the application a recommendation on the candidacy for temporary administrator, the written consent of that candidate on the candidacy for temporary administrator.
4. Documents attached to the application shall be submitted in the original or in the form of properly certified carbon copies.
The impossibility to submit the documents attached to the application in the original or a properly certified carbon copy must be substantiated by the applicant.
5. The application of the creditor may be based on claims for different liabilities.
6. The creditors may unite their claims against the debtor and submit one application to the Court. Such application shall be signed by all the creditors having united their claims.
7. When filing an application for involuntary bankruptcy, the copy of the application and the carbon copies of documents submitted with the application shall be attached to the application, in the number of copies corresponding to the number of debtors. The applicant shall not forward the application and the documents attached thereto to the debtor prior to filing an application for involuntary bankruptcy.
8. In case of an application for involuntary bankruptcy, the creditor may file a motion with the Court to the effect that the application is considered as a claim once the debtor is declared bankrupt, provided that the application meets the requirements prescribed by part 2 of Article 46 of this Law. In case of filing such a motion, two more copies of the application and the documents attached shall be submitted; in case of failure to observe this requirement the motion shall not be considered, and the person having submitted the application shall be informed thereon no later than on the following day. Filing a motion shall not prejudice the right of the applicant to file a claim as prescribed by Article 46 of this Law.
(Article 11 supplemented, amended by HO-13-N of 22 December 2010, amended by HO-298-N of 21 December 2017, edited, supplemented by HO-294-N of 12 December 2019, HO-580-N of 23 December 2022)
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Article 12. |
Documents submitted by the debtor |
1. In case of submission by the debtor of an application for declaring own bankruptcy or risk of bankruptcy, the debtor shall be obliged to submit the following documents attached to the application:
(1) substantiations regarding the impossibility to meet all the claims of creditors or essential worsening of economic activities which have served as a ground for submitting a bankruptcy application;
(2) the list of the creditors and debtors of the debtor (including the nationals against whom the debtor bears responsibility for the damage caused to their life or health), their names (titles), address of place of residence (location), and the nature, size of and grounds for specific liabilities, including off-balance sheet liabilities. The indicated information shall also include the liabilities which have not matured yet, as well as guarantees provided and other obligations undertaken by the debtor;
(3) financial statements of the debtor for the last accounting period, where the debtor is an individual entrepreneur or legal person;
(4) where the debtor is a partnership, the names (titles) of the members (general partners), address of the place of residence (location), and state registration data;
(5) the statement of the debtor on the intention of financial rehabilitation;
(6) information (evidence) — no older than 90 days preceding the day of submission of the application — about the existence or absence of property belonging to the debtor by right of ownership and other property rights, including the existence or absence of property rights acquired during married life, obtained from state bodies carrying out state registration of immovable property and other property (rights) subject to state registration, from the body carrying out state registration of legal entities, the Ministry of Economy of the Republic of Armenia, the Ministry of Finance of the Republic of Armenia, the Ministry of Territorial Administration and Infrastructure of the Republic of Armenia, the Police of the Ministry of Internal Affairs of the Republic of Armenia, the Ministry of Labour and Social Affairs of the Republic of Armenia, “Central Depository of Armenia” Open Joint-Stock Company, commercial banks of the Republic of Armenia, the Compulsory Enforcement Service, where enforcement proceedings for execution of liability are instituted, from the local self-government body of the place of location of the immovable property, record-registration of movable property, and in case of a debtor who is an individual entrepreneur or legal person — also the place of implementation of his or her activities;
(7) where the debtor is a natural person — the statement of the personal account of the natural person provided by the tax authority in the form of document;
(8) evidence on having sent the carbon copies of the application and attached documents submitted to the Court on the risk of voluntary bankruptcy or bankruptcy to all creditors;
(9) in case of an application on the risk of bankruptcy — the financial recovery plan drawn up in compliance with the requirements of this Law.
2. Where the debtor intends to undergo financial rehabilitation, he or she may also submit — attached to the application — the financial recovery plan drawn up in compliance with the requirements of this Law.
3. In case of impossibility to submit the documents provided for by this Article, the debtor shall be obliged to submit a reasoned substantiation thereon to the Court. All risks related to the failure to submit or incomplete submission of the documents provided for by this Article shall be borne by the debtor.
(Article 12 amended, supplemented by HO-13-N of 22 December 2010, supplemented by HO-105-N of 17 June 2016, HO-294-N of 12 December 2019, amended by HO-89-N of 3 March 2021, edited by HO-27-N of 16 January 2024)
(Law HO-89-N of 3 March 2021 has a transitional provision)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 13. |
Accepting the bankruptcy application for proceedings |
1. The judge shall accept the application submitted in observance of the requirements provided for by this Law for proceedings on the day of receiving the application. Where there is a bankruptcy case against the debtor in court, the bankruptcy application submitted by a new applicant shall be examined as separate proceedings.
2. The judge shall render a decision on accepting the application for proceedings. The Court shall appoint a temporary bankruptcy administrator as prescribed by part 2.1 of this Article. Where a temporary bankruptcy administrator has already been appointed in the case pending in the Court, a new temporary bankruptcy administrator shall not be appointed. A temporary bankruptcy administrator shall not be appointed in a case on the bankruptcy of an investment fund, and the powers of the temporary bankruptcy administrator, provided for by this Law, shall be exercised by the investment fund custodian, under the procedure and conditions prescribed by this Law, unless other regulation is provided for or stems from the Law of the Republic of Armenia “On investment funds”.
2.1. Where a case has been initiated upon an application for involuntary bankruptcy the Court shall appoint the candidate for temporary administrator as nominated by the creditor (in case of several creditors - by all creditors), and where the case has been initiated upon an application for voluntary bankruptcy, the Court shall appoint the candidate for temporary administrator nominated by the debtor legal person or individual entrepreneur as a temporary bankruptcy administrator along with accepting the application for proceedings, by verifying the compliance of the candidate for administrator with the requirements prescribed by Article 22 of this Law. In case the candidate has not been nominated or he or she fails to comply with the requirements prescribed by Article 22 of this Law, the Court shall, within a period of one day, file a petition to the Ministry of Justice of the Republic of Armenia on nominating a candidate for administrator and the choice of the new candidate and appointment of the administrator shall be carried out as prescribed by parts 6 and 7 of Article 22 of this Law.
3. The Court shall immediately forward the decision on accepting the bankruptcy application for proceedings to:
(a) the state body having granted state registration to the debtor;
(b) the state bodies granting state registration of property rights, as well as to the Central Depositary;
(c) the tax authorities with which the debtor is registered;
(d) the state customs authorities;
(e) the Central Bank of the Republic of Armenia (hereinafter referred to as “the Central Bank”);
(f) the Compulsory Enforcement Service;
(g) the state body (bodies) having issued a licence to the debtor, where information on possessing a licence is available in the application;
(h) the state body competent in employment and social matters;
(i) Commission for the Protection of Competition;
(j) the General Prosecutor’s Office of the Republic of Armenia.
3.1. Document circulation between the Court, state and local self-government bodies and bankruptcy administrator may be carried out electronically and the procedure shall be defined by the Government.
4. Upon the motion of the temporary administrator or the creditor and by the decision of the Court, necessary restriction on the disposal, possession or use of the property of the debtor or of the property under possession or use of the debtor may be applied, where, as a result of the failure to apply them, the property of the debtor may significantly decrease.
5. From the moment of receiving the decision of the Court on accepting the bankruptcy application for proceedings, the Compulsory Enforcement Service shall suspend all enforcement proceedings on levy execution on the property of the debtor.
(Article 13 supplemented by HO-256-N of 22 December 2010, HO-13-N of 22 December 2010, amended, supplemented by HO-235-N of 23 June 2011, supplemented by HO-252-N of 23 March 2018, amended, edited, supplemented by HO-294-N of 12 December 2019, supplemented by HO-89-N of 3 March 2021, amended by HO-102-N of 3 March 2021, HO-580-N of 23 December 2022)
(Law HO-89-N of 3 March 2021 has a transitional provision)
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Article 13.1. |
Access to information via the electronic information system |
1. The Court may have access to information necessary for the examination of the case from other bodies and persons via the unified electronic information system.
2. The information necessary for the Court shall be automatically generated in the electronic information system based on the information provided upon request. The response to the request shall automatically be prepared in the form of an electronic document which is certified by the electronic information system. The copy of the response to the request printed from the electronic information system shall be equivalent to the response received upon an application or based on the decision of the body disposing the information.
(Article 13.1 supplemented by HO-580-N of 23 December 2022)
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Article 14. |
Rejecting the acceptance of the bankruptcy application or the application on risk of bankruptcy |
(title edited by HO-105-N of 17 June 2016)
1. The judge shall reject the acceptance of the bankruptcy application for proceedings, where:
(a) a judgment on declaring the debtor as bankrupt, having entered into legal force, is available;
(b) an application on declaring bankrupt has been submitted against the person who may not be a debtor pursuant to this Law.
1.1. The judge shall reject the acceptance of the application on risk of bankruptcy for proceedings:
(a) in the case provided for by sub-point “a” of part 1 of this Article;
(b) where the grounds provided for by point 2.2 of part 2 of Article 3 of this Law are not available.
2. The judge shall render a decision on rejecting the acceptance of the application within a period of three days from the day of its receipt.
3. The decision of the judge, the application and the documents attached thereto shall be duly forwarded to the applicant.
4. The decision of the Court on rejecting the acceptance of the application may be appealed against before the Court of Appeal within a period of three days from the day of its receipt by the applicant.
5. In case of revocation of the decision, the application shall be deemed to be accepted by the Court on the day of initial submission.
(Article 14 amended, edited by HO-13-N of 22 December 2010, edited, supplemented by HO-105-N of 17 June 2016, amended by HO-294-N of 12 December 2019)
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Article 15. |
Returning the bankruptcy application or the application on risk of bankruptcy |
(title edited by HO-105-N of 17 June 2016)
1. The judge shall return the bankruptcy application or the application on risk of bankruptcy:
(a) where the requirements of Articles 11 and 12 of this Law have not been observed, and the judge has not deemed as grounded the impossibility of submitting relevant documents;
(b) where claims for declaring several debtors bankrupt is joined in one application, except where the debtors are spouses and bear joint and severe liability against the applicant by virtue of law;
(c) in other cases provided for by the Civil Procedure Code.
1.1. The judge shall return the bankruptcy application, where the debtor has submitted an application on risk of bankruptcy, except for the case provided for by Article 15.6 of this Law.
2. The judge shall render a decision on returning the application within a period of three days from the day of its receipt.
3. The return of the application shall not be a hindrance to applying to the Court again after eliminating the contraventions.
4. The decision of the Court on returning the application may be appealed against before the Court of Appeal within a period of three days from the day of its receipt by the applicant.
5. In case of revocation of the decision, the application shall be deemed to be accepted by the Court on the day of initial submission.
(Article 15 supplemented, amended, edited by HO-13-N of 22 December 2010, edited, supplemented by HO-105-N of 17 June 2016, amended by HO-294-N of 12 December 2019)
CHAPTER 2.1
(Chapter supplemented by HO-105-N of 17 June 2016)
PROCEEDINGS ON RISK OF BANKRUPTCY
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Article 15.1. |
Procedure for consideration of the application on risk of bankruptcy |
1. The Court shall examine the application on risk of bankruptcy submitted by the debtor pursuant to the rules for bankruptcy proceedings, provided for by this Law, in observance of the special rules prescribed by the provisions of this Chapter.
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Article 15.2. |
Acceptance of the bankruptcy application for proceedings |
1. The judge shall accept the application on risk of bankruptcy, submitted in observance of the requirements provided for by this Law, for proceedings on the day of its receipt and appoint a court session within a period of one month, unless the grounds for rejection of the acceptance of the application on risk of bankruptcy or its return, provided for by Articles 14 and 15 of this Law, are available.
2. The judge shall render a decision on accepting the application for proceedings and convening a court session. Concurrently with accepting the application for proceedings, the Court shall appoint the candidate nominated by the creditor, by verifying the compliance of the candidate for administrator with the requirements prescribed by Article 22 of this Law. In case the nominated candidate for administrator fails to comply with the requirements prescribed by Article 22 of this Law, the Court shall, within a period of one day, file a petition to the Ministry of Justice of the Republic of Armenia on nominating a candidate for administrator, and the choice of the new candidate and appointment of the administrator shall be carried out as prescribed by parts 6-7 of Article 22 of this Law.
3. The Court shall immediately forward the decision on accepting the application on risk of bankruptcy for proceedings to the debtor, the creditors mentioned by the debtor in the application, and the administrator.
(Article 15.2 edited by HO-294-N of 12 December 2019)
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Article 15.3. |
Consideration of the application of the debtor on risk of bankruptcy |
1. Failure by the debtor, creditors or administrator, having been duly informed about the time and place of the court session, to appear shall not be a hindrance to the consideration of the application on risk of bankruptcy of the debtor.
2. For the purpose of considering (revising, amending, etc.) the financial recovery plan, upon the motion of the creditor, the Court may extend the consideration of the application for a period of ninety days.
3. Based on the results of consideration of the application, as well as — where available — objections and recommendations of creditors in the court session, the Court shall render a decision on granting the application of the debtor on risk of bankruptcy and approving the financial recovery plan, where the financial recovery plan of the debtor complies with the requirements of this Law and upon a positive opinion of the administrator on the reliability of the information available in the financial recovery plan and the feasibility of carrying out the plan, and
(1) the creditors have unanimously given consent to the financial recovery plan of the debtor;
(2) creditors having the right to at least 60 per cent of claims in the total size of the claims against the debtor have given consent to the financial recovery plan of the debtor, the consent of the administrator and debtor is available, and the financial recovery plan of the debtor provides for granting the claims of the creditors having failed to give consent to the plan, at least in the amount and within time period that the creditors could have reasonably expected in case of liquidation of the debtor.
4. In case where the use of the object of the secured right of the secured creditor is provided for by the financial recovery plan, provided for by part 3 of this Article, the Court shall render a decision on granting the application of the debtor on risk of bankruptcy and approving the financial recovery plan, where the secured creditor has been provided with equivalent protection (Article 41), on which a contract has been concluded.
5. Based on the results of consideration of the application in the court session, the Court shall render a decision on rejecting the application of the debtor on risk of bankruptcy, where the grounds for granting thereof, provided for by this Law, are not available.
6. The judgment of the Court on granting the application on risk of bankruptcy of the debtor and approving the financial recovery plan or rejecting the application shall enter into legal force from the moment of promulgation. The judgment on granting or rejecting application on risk of bankruptcy of the debtor may be appealed against through appeal procedure within a period of fifteen days from the day of rendering the judgment.
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Article 15.4. |
Consequences of granting the application of the debtor on risk of bankruptcy |
1. After entry into legal force of the judgment on granting the application of the debtor on risk of bankruptcy and approving the financial recovery plan, the Court shall:
(1) inform immediately about granting the application of the debtor on risk of bankruptcy and appointing an administrator:
(a) the state body carrying out the state registration of the debtor;
(b) the state bodies carrying out the state registration of immovable property and other property (rights) subject to state registration;
(c) the tax authorities with which the debtor is registered;
(d) the state customs authorities;
(e) the Central Bank for notifying the banks and other credit organisations of the Republic of Armenia and the Central Depositary of the Republic of Armenia, as well as the credit bureaus operating in the territory of the Republic of Armenia;
(f) the Compulsory Enforcement Service;
(g) the Court of Cassation of the Republic of Armenia for notifying all the courts of the Republic of Armenia;
(h) the state body (bodies) having issued a licence to the debtor, where information on possessing a licence is available in the application;
(i) the state body competent in employment and social matters;
(j) the General Prosecutor’s Office of the Republic of Armenia.
The notification provided for by this point shall be forwarded in writing, and where available, through electronic document circulation system;
(2) oblige the administrator to publish — no later than within five days from the moment of entry into force of the judgment on granting the application on risk of bankruptcy — information on granting the application on risk of bankruptcy on the official web-site of public notifications of the Republic of Armenia, at the expense of the debtor.
2. From the moment of entry into legal force of the judgment of the Court on granting the application of the debtor on risk of bankruptcy and approving the financial recovery plan, and during the period of effectiveness of the financial recovery plan, as well as in cases provided for by the Criminal Procedure Code of the Republic of Armenia, a decision of the Court is not required for conducting an inspection or study.
3. From the moment of entry into legal force of the judgment of the Court on granting the application of the debtor on risk of bankruptcy and approving the financial recovery plan, the powers of persons having participation in the authorised (share, equity) capital of the debtor, regarding the administration and disposal of the property prescribed by law and the charter of the debtor, conditioned by that participation, shall be suspended. The exercise of the indicated powers may be permitted by the decision of the court, within the scope of the financial recovery plan.
4. After the entry into force of the judgment of the Court on granting the application of the debtor on risk of bankruptcy and approving the financial recovery plan, the executive of the debtor shall act under the control of the administrator, and the competences of the administration bodies of the debtor to administer and dispose the property of the debtor shall be suspended for the period of effectiveness of the financial recovery plan. The executive of the debtor shall be prohibited to dispose the property of the debtor or perform any action entailing property liability for the debtor, without the consent of the administrator.
(Article 15.4 amended by HO-294-N of 12 December 2019, supplemented by HO-89-N of 3 March 2021, amended by HO-27-N of 16 January 2024)
(Law HO-89-N of 3 March 2021 has a transitional provision)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 15.5. |
Moratorium on granting the claims of creditors in the proceedings on risk of bankruptcy |
1. From the moment of entry into force of the judgment of the Court on granting the application on risk of bankruptcy and approving the financial recovery plan:
(1) providing monetary or another satisfaction by the debtor to creditors under any contractual or other obligations thereof, without a decision of the court, in another manner than provided for by the financial recovery plan, shall be prohibited;
(2) initiation of any civil or administrative proceedings involving claims to levy execution on money or to transfer property of the debtor, where the debtor acts as a defendant or a third party acting on the side of the defendant, not submitting independent claims against the subject of dispute with respect to the debtor, shall be prohibited;
(3) proceedings in the civil case with claims to levy execution on money or to transfer property from the debtor, having regard to the proceedings on risk of bankruptcy or having an impact on the course thereof, where the debtor acts as a defendant or a third party acting on the side of the defendant, not submitting independent claims against the subject of dispute with respect to the debtor, shall be terminated.
The civil case indicated in this point may be resumed after the completion of the proceedings on risk of bankruptcy;
(4) the calculation, payment or levying of default penalties and other financial sanctions, as well as interest subject to calculation, payment or levying for the failure to fulfil or improper fulfilment of monetary obligations and payments, including the obligations with respect to taxes, duties and other fees, shall be suspended;
(5) all enforcement proceedings for levy in execution of property or all proceedings for levy in execution of non-proprietary nature, which affect the assets included in the estate of the debtor declared bankrupt or the rights of that creditor, except for other cases prescribed by this Law, shall be terminated.
2. Moratorium shall not extend to:
(1) levy in execution of alimonies;
(2) giving monetary or other satisfaction — by persons having provided guarantee or suretyship in securing the fulfilment of liabilities of the debtor — with respect to that guarantee or suretyship or any action or process aimed at the fulfilment thereof;
(3) the obligations undertaken by the debtor during the period after rendering the judgment of the Court on granting the application on risk of bankruptcy and approving the financial recovery plan;
(4) the object of the secured right of the secured creditor having a secured right, where the Court has allowed the debtor — as prescribed by this Law — to realise it through extra-judicial procedure. The regulations prescribed by Articles 39.1 and 39.2 of this Law shall apply to realisation of the object of the secured right through extra-judicial procedure;
(5) in the cases provided for by Article 40.1 of this Law;
(6) the claim for compensation of financial expenses incurred by the authorised body in regard to elimination of the recorded violations prescribed by Laws of the Republic of Armenia “On fire safety” and “On state regulation in regard to technical safety”.
3. From the moment of entry into legal force of the judgment of the Court on granting the application on risk of bankruptcy of a debtor that is a legal person or an individual entrepreneur and approving the financial recovery plan, the executive of the debtor or the individual entrepreneur shall continue submitting financial and other reports and bear the liability prescribed by the legislation for the failure to submit or improper submission thereof.
4. Moratorium shall continue until the day of termination of the financial recovery plan in the given proceedings on risk of bankruptcy.
(Article 15.5 supplemented by HO-192-N of 27 October 2016, amended by HO-298-N of 21 December 2017, edited by HO-222-N of 26 May 2021, supplemented by HO-187-N of 24 May 2023)
(Article as amended by Law HO-192-N of 11 April 2024 shall enter into force from 1 January 2026)
(Law HO-192-N of 11 April 2024 has a transitional provision)
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Article 15.6. |
Declaring the debtor bankrupt on the basis of the application on risk of bankruptcy |
1. Where, as a result of consideration of the application on risk of bankruptcy, it is revealed that the grounds for declaring the debtor bankrupt in compliance with this Law exist, the Court may declare the debtor bankrupt, where the debtor submits a relevant application.
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Article 15.7. |
Mandatory conditions for the financial recovery plan |
1. Besides the conditions provided for by this Law, the financial recovery plan of the debtor, submitted in the proceedings on risk of bankruptcy, must also include:
(1) the powers of the administrator;
(2) a condition on preferential satisfaction of claims of the person financing the implementation of the financial recovery plan for the debtor; moreover, that claim must be granted advantage over the claims of all the rest of the creditors, remuneration of the administrator, and administrative costs, in compliance with part 5 of Article 61 of this Law.
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Article 15.8. |
Early termination of the financial recovery plan |
1. In case of availability of the grounds for early termination of the financial recovery plan provided for by this Law, the Court shall, upon the motion of the administrator, terminate early the financial recovery plan and render a judgment on completing the proceedings on risk of bankruptcy of the debtor.
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Article 15.9. |
Completion of the financial recovery plan |
1. Where the Court rejects the report of the administrator on carrying out the financial recovery plan in the proceedings on risk of bankruptcy as prescribed by this Law, a judgment on completing the proceedings on risk of bankruptcy shall be rendered.
CHAPTER 3
RESOLVING THE MATTER OF DECLARING BANKRUPT
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Article 16. |
Declaring bankrupt on the basis of application for voluntary bankruptcy |
(title supplemented, amended by HO-105-N of 17 June 2016, amended by HO-294-N of 12 December 2019)
1. The judge shall —within a week after expiry of the three-day period following the day of accepting the application for voluntary bankruptcy of the debtor — render a judgment on declaring the debtor bankrupt, where the grounds provided for by points 2 or 2.1 of part 2 of Article 3 or part 2 of Article 5 of this Law are available.
2. (part repealed by HO-294-N of 12 December 2019)
3. (part repealed by HO-294-N of 12 December 2019)
4. (part repealed by HO-13-N of 22 December 2010)
(Article 16 amended by HO-13-N of 22 December 2010, supplemented, amended, edited by HO-105-N of 17 June 2016, amended by HO-294-N 12 December 2019)
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Article 17. |
Declaring the debtor bankrupt on the basis of the application for involuntary bankruptcy |
(title amended by HO-294-N of 12 December 2019)
1. The court shall — on the next day after accepting the application on involuntary bankruptcy for proceedings — forward the decision on accepting the application for proceedings to the debtor, by attaching carbon copies of the application and documents attached thereto.
Within a period of five days after receiving the decision on accepting the application on involuntary bankruptcy for proceedings, the debtor shall submit the documents provided for by Article 12 of this Law to the Court and shall bear the risk of legal consequences arising due to the failure to submit them.
Where the debtor fails to challenge in writing the bankruptcy thereof within fifteen days following the receipt of the decision of the court, then, within a week, the judge shall render a judgment on declaring the debtor bankrupt without convening a court session, where the debtor is insolvent or the grounds provided for by point 1 of part 2 of Article 3 of this Law are available.
2. Where the debtor challenges the bankruptcy thereof by submitting written objections to the court within fifteen days following the receipt of the decision of the court, the judge shall — within ten days from the moment of receiving the objections — convene a court session, and the person (persons) having submitted the application and the debtor shall be duly notified of the time and venue of the court session.
Failure by the debtor having been duly informed of the time and venue of the court session to appear shall not be a hindrance to the examination of the case.
2.1. The written objection of the debtor must contain a position on partially or fully objecting to the claim submitted, the facts underlying the objections need to be cited, where available, and the evidence confirming each of the facts underlying the objections shall be submitted attached, with a relevant note on which piece of evidence is targeted at the confirmation of the particular fact. The debtor shall have the right to supplement the objection or submit additional evidence prior to or during the court session, where he or she substantiates the impossibility of submitting the evidence with an objection, for reasons beyond his or her control.
The objection failing to meet the requirements of this Article shall not be subject to consideration by the court.
3. Where, as a result of full or partial repayment of the debt after the application has been submitted to the court, the debtor ceases to be insolvent or the grounds prescribed by part 2 of Article 3 of this Law are eliminated, the court shall — by the judgment on rejecting the application — oblige the debtor to compensate the judicial costs and pay the remuneration of the temporary administrator.
4. (part repealed by HO-13-N of 22 December 2010)
5. In case the application for bankruptcy is rejected or the proceedings in the case are terminated, the obligation to compensate the judicial costs and pay the remuneration of the temporary administrator (administrator) shall be imposed on the person having filed an application for bankruptcy, except for the cases provided for by part 6 of this Article.
6. Compensation for judicial costs and payment of remuneration of the temporary administrator shall be incurred by the debtor, where:
(1) the bankruptcy proceedings have been terminated on the ground of declaring the debtor bankrupt in another bankruptcy case;
(2) after submission of the bankruptcy application the debtor ceases to be insolvent due to full or partial repayment of the debt, or the grounds prescribed by part 2 of Article 3 of this Law have been eliminated and the applicant has withdrawn the application for bankruptcy;
(3) it has been envisaged by the conciliation agreement approved by the Court.
7. In case the application for bankruptcy is rejected or the proceedings in the case are terminated, the writ of execution drawn up on the basis of the application of the temporary administrator (administrator) with respect to the remuneration of the temporary administrator (administrator) shall be forwarded for compulsory enforcement.
(Article 17 supplemented, amended by HO-13-N of 22 December 2010, supplemented by HO-105-N of 17 June 2016, amended, supplemented by HO-294-N of 12 December 2019, HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
(Article as amended by Law HO-192-N of 11 April 2024 shall enter into force from 1 January 2026 and shall be in effect in accordance with the decision of the Government provided for by part 4 of Article 23 of the Law “On enforcement proceedings”, from the moment of introducing the system ensuring electronic transfer — by the court — of the data required for instituting enforcement proceedings to the Compulsory Enforcement Service and the system for the court, the Constitutional Court, the Supreme Judicial Council (the staffs thereof) for electronic submission of applications on compulsory enforcement
(Law HO-192-N of 11 April 2024 has a transitional provision)
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Article 17.1. |
Entry into force of judicial acts of the Court rendered in the bankruptcy case |
(title amended by HO-294-N of 12 December 2019)
1. Judgements of the Court rendered in the bankruptcy case shall enter into legal force from the moment of promulgation, except for judgement on closure of the bankruptcy case, which shall enter into force after 15 days from the moment of promulgation.
2. Decisions of the Court in a bankruptcy case announced as a separate act shall enter into force from the moment of posting them on the official website of the judiciary.
3. Judicial acts of the Court in a bankruptcy case announced as a separate act shall also be forwarded to the temporary administrator or administrator, respectively.
(Article 17.1 supplemented by HO-13-N of 22 December 2010, amended, edited, supplemented by HO-294-N of 12 December 2019)
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Article 18. |
Conciliation agreement of parties |
1. The parties may conclude a conciliation agreement within the period established for withdrawal of the bankruptcy application. Upon motion of parties, the indicated period may be extended by decision of the Court for a term of up to two weeks. If the Court has extended the period for conclusion of conciliation agreement between the parties and no conciliation agreement has been concluded in that period, then the judge shall, without convening a court session, deliver a judgement within a week following the expiry of the period established by the Court.
2. The conciliation agreement concluded between the parties shall be in writing.
3. The court shall, prior to approving the conciliation agreement, clarify to the parties its procedural consequences.
4. The court shall not approve the conciliation agreement, where it contradicts the law or violates the rights and lawful interests of other persons.
5. After declaring the debtor bankrupt, the right of all creditors to conclude a conciliation agreement may be exercised exclusively through the approval of the recovery plan in compliance with the requirements of this Law. After declaring the debtor bankrupt, the right of a specific creditor and debtor to conclude a conciliation agreement within the scope of the recovery plan may be exercised through full or partial release of the debt by the given creditor unilaterally or through unilateral extension of the redemption period.
(Article 18 edited by HO-13N of 22 December 2010, HO-294-N of 12 December 2019)
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Article 19. |
Consequences of declaring the debtor bankrupt or rejecting the application on declaring bankrupt |
(title amended by HO-13-N of 22 December 2010)
1. After the entry into legal force of the judgment on declaring the debtor bankrupt, the Court shall:
(a) immediately appoint, as prescribed by Article 22 of this Law, a bankruptcy administrator (hereinafter referred to as “administrator”), by terminating the powers of the temporary administrator. A bankruptcy administrator shall not be appointed in a case on the bankruptcy of an investment fund, and the powers of the temporary bankruptcy administrator, provided for by this Law, shall be exercised by the investment fund custodian, through the procedure and under the conditions prescribed by this Law, unless another regulation is provided for or stems from the Law of the Republic of Armenia “On investment funds”;
(b) appoint the date and venue of the first Meeting of Creditors upon the decision on approval of the final list of claims. The first Meeting of Creditors shall be appointed no later than within forty days and no sooner than within thirty days from the day of rendering the decision on approval of the final list of claims. Where a motion on the venue for holding the first Meeting of Creditors is submitted by the administrator, the Meeting shall be assigned at the venue specified via the motion — in the territory of the Republic of Armenia.
The appeal against the decision of the court on approving the final list of claims may not be a hindrance to holding the first Meeting of Creditors, except where all claims approved by the decision are appealed against;
(c) immediately inform the following bodies on rejecting the application for declaring the debtor bankrupt or leaving the application without consideration, as well as on terminating the case proceedings:
- the state body having granted state registration to the debtor;
- the state bodies carrying out the state registration of immovable property and other property (rights) subject to state registration;
- the tax authorities with which the debtor is registered;
- the state customs authorities;
- the Central Bank for notifying the banks and other credit organisations of the Republic of Armenia and the Central Depositary of the Republic of Armenia, as well as the credit bureaus operating in the territory of the Republic of Armenia;
- the Compulsory Enforcement Service;
- the Court of Cassation of the Republic of Armenia for notifying all the courts of the Republic of Armenia;
- the state body (bodies) having issued a licence or permit to subsoil use to the debtor, where information on having a licence or permit to subsoil use is available in the application;
- the state body competent in employment and social matters;
- the Commission for the Protection of Competition;
- General Prosecutor’s Office of the Republic of Armenia.
The notification provided for by this point shall be forwarded in writing and in case of availability through employing electronic document circulation system;
(d) oblige the administrator to publish — no later than within five days from the moment of entry into force of relevant judicial acts — the information on declaring the debtor bankrupt, appointing an administrator and on the first Meeting of Creditors on the official web-site of public notifications of the Republic of Armenia at http://www.azdarar.am;
(e) in cases provided for by this Law, convene a court session upon the motion of the administrator, the Board of Creditors, the creditor or the debtor;
(f) oblige the debtor to submit the documents prescribed by Article 12 of this Law to the administrator within ten days, where the application has been submitted by the creditor or, in case of submission of the application by the debtor, they have been submitted incompletely;
(g) once rendering a decision on liquidation of the debtor, immediately render a decision on suspending the rights to dispose and manage the property of the debtor;
(h) put a lien on the property and monetary funds of the debtor, except for the cases provided for by the Law of the Republic of Armenia “On payment and settlement systems and payment and settlement organisations”;
(i) (point repealed by Ho-294-N of 12 December 2019)
(j) explain the debtor in writing the responsibility to submit the declaration prescribed by this Law and the consequences of violation thereof while posting the explanation on the official website of the judiciary.
1.1. In case of rendering a judgment on declaring the debtor bankrupt or granting the application on the risk of bankruptcy, the proceedings of cases pending in the Court upon other applications for declaring the same debtor bankrupt shall be terminated after the expiry of the period for appealing against the judgment, and in case the judgment has been appealed — within a week after entry into legal force of the judgment.
2. From the moment of entry into legal force of the judgment on declaring the debtor bankrupt, the debtor may undergo inspection or study only upon a decision of the Court, except in the case of the inspections and studies which have commenced or the assignments whereon have been published before the judgment on declaring the debtor as bankrupt is published on the official website of the judicial authority, as well as control functions performed for ensuring technical and fire safety or in the field of nature protection upon consent of the Prime Minister, where there is imminent danger threatening the life, health of citizens or danger of natural or man-made emergency situations. Within the period of effectiveness of the financial recovery plan of the debtor and resuming of activities of the debtor undergoing liquidation proceedings, as well as in cases provided for by the Civil Procedure Code of the Republic of Armenia, decision of the court shall not be required for conducting inspection or study.
The decision on giving permission for or rejecting conducting inspection or study may be appealed against through the appeal procedure.
Conducting inspection or study after resuming the liquidation process of the debtor shall be prohibited, except for the inspections conducted by the tax authority which have began before a decision on instituting proceedings for liquidation against the debtor is rendered or the outgoing examinations prescribed by part 3 of Article 343 of the Tax Code of the Republic of Armenia, as well as in the case of control functions performed for ensuring technical and fire safety or in the field of nature protection upon consent of the Prime Minister, where there is imminent danger threatening the life, health of citizens or danger of natural or man-made emergency situations.
3. From the moment of entry into legal force of the judgment on declaring the debtor bankrupt, the powers of persons having participation in the authorised (share, equity) capital of the debtor regarding the administration and disposal of the property prescribed by law and the charter of the debtor, conditioned by that participation, shall be suspended. The exercise of the indicated powers may be permitted by the decision of the court, within the scope of the financial recovery plan.
From the moment of entry into legal force of the judgment on declaring the debtor bankrupt, the debtor (the executive) shall act as provided for by parts 2 and 3 of Article 47 of this Law.
4. The state bodies provided for by point “c” of part 1 of this Article shall be obliged to submit to court — within a period of fifteen days — information on the registration of the property of the debtor (including participation in share, equity or other capital of legal persons), as well as of rights (including the rights of the pledgee of the debtor), and the banks, the Central Depository of Armenia and person entitled to carry out custody of crypto-assets — information on the bank accounts of the debtor and balances thereof, as well as the rights to securities and crypto-assets.
5. After the entry into legal force of the judgment on declaring the debtor bankrupt, each creditor may get familiarised with the materials of the bankruptcy proceedings, as well as require from the administrator information on activities, financial state of the debtor, including on his or her inventoried assets and liabilities.
6. The judicial act of the Court on rejecting the application for declaring the debtor bankrupt or terminating the proceedings of the case, having entered into legal force, shall be a ground for eliminating the restrictions provided for by part 4 and suspensions provided for by part 5 of Article 13 of this Law.
7. The rejection of the application with the reasoning that the grounds for bankruptcy are not obvious shall not prohibit the same person to apply to court with the same application against the same debtor in case the availability of grounds for bankruptcy becomes obvious.
(Article 19 amended by HO-48-N of 5 February 2009, supplemented by HO-191-N of 22 October 2008, amended, supplemented by HO-256-N of 22 December 2010, HO-13-N of 22 December 2010, amended by HO-143-N of 19 March 2012, supplemented by HO-105-N of 17 June 2016, amended by HO-298-N of 21 December 2017, supplemented by HO-252-N of 23 March 2018, amended, edited, supplemented by HO-294-N of 12 December 2019, supplemented, amended by HO-398-N of 16 July 2020, supplemented by HO-89-N of 3 March 2021, amended by HO-102-N of 3 March 2021, supplemented by HO-187-N of 24 May 2023, supplemented, amended by HO-22-N of 16 January 2024, HO-27-N of 16 January 2024, HO-178 of 29 May 2025)
(Law HO-89-N of 3 March 2021 has a transitional provision)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 20. |
Appealing against acts rendered during a bankruptcy case |
1. A judgment of the Court in a bankruptcy case may be appealed through appeal procedure. An appeal against the judgment may be filed within a period of fifteen days following the publication of the judgment.
2. The debtor, the creditor (creditors) shall have the right to bring an appeal against the judgment of the Court on declaring the debtor bankrupt or on rejecting the application for declaring bankrupt.
3. The temporary bankruptcy administrator (administrator) shall also have the right to bring an appeal against the judicial acts on rejecting the application for declaring bankrupt or terminating the proceedings in the bankruptcy case, with respect to his or her remuneration.
4. The appeal against the judgment of the Court shall not suspend the proceedings in a bankruptcy case, as well as the actions of the administrator appointed by the Court, unless the Court of Appeals has suspended execution of the judicial act.
5. Where the judgment on declaring the debtor bankrupt is quashed and returned for new examination, all actions and time limits in the bankruptcy proceeding shall be suspended and shall be resumed from the moment of declaring the debtor bankrupt.
6. Decisions rendered during the examination of a bankruptcy case may be appealed against through appeal procedure within a period of fifteen days after they are rendered, except for the cases where the Court of Appeal deems the omission of the time limit to be justified. Appealing against the decisions shall not suspend the performance of actions deriving from such decisions, except for the cases when upon the motion of the debtor, administrator or creditor the Court of Appeal renders a decision to suspend performance of those actions, where it is substantiated by that motion that the failure to do so would inevitably give rise to grave consequences for the debtor or the creditor.
7. The decision of the Court on approving the final list of claims, as well as specific claims of creditors may be appealed against fully or partially with respect to specific claims or any part thereof. In case of partial appeal against the decision, the decision of the Court on approving the final list of claims, as well as specific claims shall enter into force with respect to non-appealed claims or non-appealed part of a specific claim.
8. The appeal brought against the decision rendered during a bankruptcy case shall be examined and decided on under the rules for examination of an appeal against interim judicial acts prescribed by the Civil Procedure Code of the Republic of Armenia.
9. The Court of Appeal shall examine and decide on the appeal brought against the decision provided for by part 7 of this Article by a panel of three judges, within a month following acceptance of the appeal for proceedings.
(Article 20 amended by HO-48-N of 5 February 2009, edited, amended by HO-13-N of 22 December 2010, edited by HO-294-N of 12 December 2019)
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Article 20.1. |
Grounds and procedure for suspending the examination of specific claims in a bankruptcy case |
1. Proceedings in a bankruptcy case may be suspended with respect to claims of specific creditors in the case of availability of grounds for suspension, provided for by the Civil Procedure Code of the Republic of Armenia, where those legal regulations are applicable to the examination of specific claims in bankruptcy proceedings.
2. Suspension of proceedings with respect to specific claims shall not interrupt the course of bankruptcy proceedings.
3. In case of suspending the examination of a specific claim, after satisfying the rest of the claims of the same priority during the further course of proceedings, monetary funds proportionate to the amount of the suspended claim shall be frozen on the special bankruptcy account. After the grounds for suspension of proceedings are eliminated and the claim is approved, the monetary funds frozen on the special bankruptcy account shall be transferred to the creditor upon the decision of the court. Where the claim is not approved after the grounds for suspension of proceedings are eliminated, the monetary funds frozen on the special bankruptcy account on for that purpose shall be distributed as prescribed by this Law, based on the decision of the court.
4. The creditor the examination of the claims whereof has been suspended, may participate in the meetings of creditors only in a consultative capacity. In case of elimination of grounds for suspension of the examination of the claim and approval of that claim by the court, the creditor shall participate in the Meeting of Creditors with the right to vote, as prescribed by this Law.
(Article 20.1 amended by HO-105-N of 17 June 2016)
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Article 20.2. |
Time limits for appealing acts subject to appeal |
1. Non-working days provided for by legislation shall not be included in the time limits for appealing judicial acts that are calculated by days provided for by this Law.
(Article 20.2 supplemented by HO-22-N of 16 January 2024)
CHAPTER 4
TEMPORARY BANKRUPTCY ADMINISTRATORS AND ADMINISTRATORS
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Article 21. |
Temporary administrator |
1. (part repealed by HO-294-N of 12 December 2019)
2. The temporary bankruptcy administrator shall:
(a) file a motion with the Court for applying the restrictions provided for by part 4 of Article 13 of this Law;
(b) exercise the powers provided for by points “e”, “f” and “k.1” of Article 29 of this Law until the entry into legal force of the judgment on declaring the debtor bankrupt.
3. The powers of the temporary administrator shall be terminated by the decision of the Court on appointing an administrator. The powers of the temporary administrator shall be terminated in the case of termination of the bankruptcy proceedings and rejection of the application for bankruptcy. Where the temporary administrator is not appointed as administrator the remuneration of the temporary administrator shall be paid by the debtor declared bankrupt.
4. Where the bankruptcy proceedings are terminated, the application for bankruptcy is rejected, as well as where the temporary administrator is not appointed as administrator, the remuneration of the temporary administrator shall be paid in lump-sum, respectively, in the amount of 1/12 of the average monthly salary calculated for the director of the debtor or the average monthly income of the debtor natural person for the last one year preceding the moment of rendering of the respective judgment (decision) by the Court and in the amount of the product of the months actually worked as temporary administrator. If the natural person debtor has had no income within the last one month, the remuneration of the temporary administrator shall be made in lump-sum, in the amount of 1/12 of the amount prescribed by Article 1 of the Law of the Republic of Armenia “On minimum monthly salary” and in the amount of the product of the months actually worked as temporary administrator.
5. The procedure for appealing against the actions (omission) of the temporary administrator and the responsibility of the temporary administrator shall be determined by the rules prescribed for the administrator.
(Article 21 edited by HO-231-N of 8 December 2010, edited, amended by HO-13-N of 22 December 2010, amended by HO-105-N of 17 June 2016, amended, supplemented, edited by HO-294-N of 12 December 2019, edited by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 22. |
Election and appointment of the administrator |
1. The person who is registered as an administrator by the Ministry of Justice of the Republic of Armenia and whose activities are not suspended, may be appointed as an administrator in a bankruptcy case.
2. Within a week after rendering judgment on declaring the debtor bankrupt, the creditor having participated in the case as an applicant (and where there are several creditors — all the creditors jointly) and the debtor, in case of voluntary bankruptcy, may file objections to appointing the temporary administrator as administrator in relation to grounds defined by part 9 of this Article. Along with filing objections, the creditor and debtor may respectively nominate a candidate for administrator, by attaching the written consent of the latter to be a candidate for administrator.
3. Where no objections have been duly filed in regard to appointing the temporary administrator as administrator, the Court shall, within a period of one day, render a decision on appointing the temporary administrator as administrator, if he or she complies with the requirements prescribed by this Article.
4. In case of filing objections in due manner in regard to appointing the temporary administrator as administrator and submitting a proposal on candidacy for administrator, the Court shall, within a period of one day, render a decision on appointing an administrator, by verifying the compliance requirements of the candidate for administrator as prescribed by this Article.
5. In cases of filing objections in due manner in regard to appointing the temporary administrator as administrator and not submitting a proposal on candidacy for administrator or failure by the nominated candidate to comply with the requirements prescribed by this Article, the Court shall, within a period of one day, file a petition on nominating a candidacy for administrator to the Ministry of Justice of the Republic of Armenia.
6. The Ministry of Justice of the Republic of Armenia shall, within a three-day-period following the receipt of the petition, select the candidate for administrator through special computer software, based upon the territorial principle, by immediately informing the administrator thereon, and shall submit his or her candidacy to the Court. In case the administrator selects any territory for service, the latter may be appointed as a temporary administrator (an administrator) only in that territory. The selection of the administrator shall not be performed upon the territorial principle, where it is impossible to select an administrator servicing the given territory.
7. After the Ministry of Justice of the Republic of Armenia submits the candidacy for the administrator, the Court shall, within a period of one day, render a decision on appointing an administrator, by verifying the compliance requirements for the candidate for administrator as prescribed by this Article. Where the grounds prescribed by part 9 of this Article are revealed in regard to the candidate, the Court shall, within a period of one day, file a petition to the Ministry of Justice of the Republic of Armenia on nominating a candidate for administrator, and the selection of the new candidate and the appointment of the administrator shall be carried out in accordance with the procedure defined by part 6 and this part of this Article.
8. The administrator may object to nominating him or her as a candidate to the Court only in the case where force major circumstances hinder his or her activities, there are grounds prescribed by part 9 of this Article or in other cases acknowledged by the Court as valid. In case the objection of the administrator is deemed justified, the Court shall, within a period of one day, file a petition to the Ministry of Justice of the Republic of Armenia on nominating a candidate for administrator, and the selection of the new candidate and the appointment of the administrator shall be carried out in accordance with the procedure defined by parts 6 and 7 of this Article.
9. A person may not be appointed to the position of administrator and in case of having been appointed his or her powers shall be early terminated, where the administrator:
(1) is affiliated with the creditors or the debtor;
(2) has a claim or obligation with respect to the debtor or the person affiliated therewith.
10. In case of early termination of powers of the administrator, the Court shall, within a period of one day, file a petition to the Ministry of Justice of the Republic of Armenia on nominating a candidate for administrator, and the selection of the new candidate and the appointment of the administrator shall be carried out in accordance with the procedure defined by parts 6 and 7 of this Article.
11. The details of the procedure for selection of the administrator shall be defined by a secondary regulatory legal act of the Minister of Justice of the Republic of Armenia.
12. The administrator shall for each consecutive year — before 1 December of the given year — submit via special computer software provided for by part 6 of this Article to the Ministry of Justice of the Republic of Armenia the document confirming payment of the state duty.
(Article 22 edited, amended by HO-231-N of 8 December 2010, edited by HO-13-N of 22 December 2010, supplemented by HO-105-N of 17 June 2016, edited by HO-294-N of 12 December 2019)
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Article 23. |
Qualification of the administrator |
(title edited by HO-294-N of 12 December 2019)
1. The person not having attained the age of 63, having higher education, having at least three years of professional work record in the field of legal, accounting and other economic activities within the last five years preceding the date of applying for qualification and having undergone training as prescribed by the Minister of Justice of the Republic of Armenia may be qualified as administrator.
2. The person may not be qualified as an administrator, where he or she:
(1) (point repealed by HO-27-N of 16 January 2024)
(2) has been convicted for committing a crime, and the conviction has not been expired or expunged;
(3) has been declared bankrupt within the last five years preceding the date of application;
(4) has been declared as having no or limited legal capacity by an effective court judgment;
3. Qualification shall be carried out by the Ministry of Justice of the Republic of Armenia. Qualification shall be carried out through qualification test, and this process shall be conducted by the Qualification Commission acting as an advisory body adjunct to the Minister of Justice of the Republic of Armenia.
4. The announcement on qualification test shall be published not later than a month prior to the qualification test.
5. The application and documents required for participation in the qualification test, including the document confirming the payment of state duty for participation in the qualification test, shall be submitted to the Ministry of Justice of the republic of Armenia within the period mentioned in the published announcement on conducting a qualification test.
6. In case of deficiencies in the application or documents attached thereto, the applicant shall be informed thereon not later than five working days prior to the date of conducting the qualification test, by allowing the applicant correct them within three working days after being informed.
7. The Ministry of Justice of the Republic of Armenia shall reject the application for participation in the qualification test, where:
(1) the documents submitted by the applicant comprise obviously false or distorted information;
(2) the data submitted by the applicant do not meet the requirements of parts 1 and 2 of this Article;
(3) the applicant has failed to submit all required documents within the time limit mentioned in the announcement and in the case prescribed by part 6 of this Article — within the time limit prescribed by the same part.
8. The procedure for formation and functioning of the Qualification Commission, requirements for the application on participation in the qualification test, the list of documents required for participation in the qualification test, the procedure for qualification test and granting qualification shall be defined by secondary regulatory legal act of the Minister of Justice of the Republic of Armenia.
(Article 23 amended by HO-231-N of 8 December 2010, supplemented, amended, edited by HO-13-N of 22 December 2010, supplemented by HO-105-N of 17 June 2016, edited by HO-294-N of 12 December 2019, amended by HO-225-N of 9 June 2022, HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 23.1. |
Rules of conduct of the administrator |
1. The administrator shall be obliged to be guided by the following rules:
(1) to ensure respectful and impartial attitude toward the debtor and creditors;
(2) to clarify the nature of the bankruptcy process to parties;
(3) protect the secret information protected by law, which has become known to him or her during the bankruptcy case;
(4) to exercise — during the bankruptcy process — the powers vested therein within the shortest possible time limit, based on the principle of reasonableness and cost-effectiveness, without damaging the bankruptcy proceedings and infringing the interests of the debtor and creditor;
(5) to contribute to formation of confidence in administrators.
(Article 23.1 supplemented by HO-105-N of 17 June 2016, HO-294-N of 12 December 2019)
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Article 24. |
Registration of the administrator with the Court |
(Article repealed by HO-13-N of 22 December 2010)
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Article 24.1. |
Registering and removing from registration the administrator |
1. In order to be registered as an administrator a person shall submit to the Ministry of Justice of the Republic of Armenia an application together with the qualification certificate for bankruptcy administrator and state registration number of an individual entrepreneur, and — attached thereto — the document certifying the membership to the Self-Regulatory Organisation of Administrators, the carbon copy of the insurance contract or certificate prescribed by part 2 of Article 25 of this Law and the written permission on publishing that carbon copy on the official website of the Ministry of Justice of the Republic of Armenia, as well as the document confirming the payment of state duty for registration. A person may not be registered as an administrator, if he or she has attained the age of 63.
2. When registered as an administrator, the person may indicate the service territory (marz, city of Yerevan) or territories, wherein he or she wishes to carry out activities, whereas in case he or she fails to indicate a service territory, the entire territory of the Republic of Armenia shall be deemed to be the service territory of the administrator.
3. The Ministry of Justice of the Republic of Armenia shall publish the list of registered administrators, information on service territories of administrators and the carbon copy of the civil liability insurance contract or certificate of each administrator on the official website of the Ministry of Justice of the Republic of Armenia.
4. The requirement for the administrator to be registered shall be verified by the Court by visiting the official website of the Ministry of Justice of the Republic of Armenia.
5. The administrator shall be removed from registration upon his or her application, as well as in cases when his or her qualification is suspended or terminated.
6. The decision on removing the administrator from registration shall be forwarded to the administrator within three days after it has been rendered.
7. The decision on removing the administrator from registration may be appealed to Court within a period of two months after entry into force of the decision.
8. The procedure for registering and removing the administrator from registration shall be defined by secondary regulatory legal act of the Minister of Justice of the Republic of Armenia.
(Article 24.1 supplemented by HO-294-N of 12 December 2019)
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Article 25. |
Liability in rem of the administrator |
1. The administrator shall bear liability in rem for the damage caused to the debtor and creditor by him or her.
2. The administrator shall be obliged to have civil liability insurance against damage caused to persons participating in bankruptcy cases in the amount of at least five thousand-fold of the minimum salary. The administrator shall be obliged to submit to the Ministry of Justice of the Republic of Armenia the copy of the insurance policy or the certificate, as well as the written permission on publishing the copy on the official website of the Ministry of Justice of the Republic of Armenia — within three days after concluding each new insurance contract — except for the cases when the activities of the administrator have been suspended as prescribed by this Law.
3. The first insurance contract shall be concluded at least five days before submission of the application for being registered as an administrator, and each subsequent new contract — at least one month before the expiry of the validity period of the previous contract.
4. A debtor and a creditor having incurred damages by the fault of the administrator shall be deemed to be insurance beneficiaries.
5. The compensation for damages incurred by beneficiaries by the fault of the administrator shall be carried out at the expense of insurance compensation, and in case of insufficiency thereof — from the property of the administrator. Where the size of the compensation is not sufficient for satisfying the claims for damages of all the beneficiaries having incurred damages, the satisfaction of claims shall be carried out in accordance with the following procedure:
(1) In the first stage, the compensation for damages shall be carried out from the insurance compensation, by distributing the given amount among all beneficiaries having incurred damages, in proportion to the claims of their damage incurred;
(2) In the second stage, the compensation shall be carried out by the administrator, among all creditors, with respect to their part of the amount of the claim for incurred damages not covered by the insurance compensation, in proportion to their claims, within a period of three months from the day of payment of the insurance compensation.
(Article 25 edited by HO-13-N of 22 December 2010, HO-294-N of 12 December 2019)
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Article 26. |
Self-Regulatory Organisation of Administrators |
1. Pursuant to this Law, a non-commercial legal person founded by not less than 20 administrators, shall be deemed to be a Self-Regulatory Organisation of Administrators. A Self-Regulatory Organisation of Administrators must permanently have 20 member administrators. An administrator may be a member of only one Self-Regulatory Organisation.
2. The Self-Regulatory Organisation of Administrators shall be deemed established from the moment of state registration as prescribed by law. The state registration of the Self-Regulatory Organisation of Administrators shall be carried out by the central body of the state register. Besides the documents prescribed by law for the registration of the Self-Regulatory Organisation of Administrators, information about its members shall be submitted as well. The name of the Self-Regulatory Organisation of Administrators shall include the words “self-regulatory organisation” or the abbreviation “SRO”.
3. The Self-Regulatory Organisation of Administrators shall be obliged to register with the Ministry of Justice of the Republic of Armenia within a period of ten days from the moment of state registration, by submitting carbon copies of the documents provided for by part 2 of this Article. In case of change of the data prescribed by the documents provided for by this part, the Self-Regulatory Organisation of Administrators shall immediately inform the Ministry of Justice of the Republic of Armenia thereon.
4. The Self-Regulatory Organisation of Administrators may be liquidated — upon the application of interested persons — by a decision of the Court for numerous or gross violations of requirements of the law or other legal acts, as well as its charter and rules.
5. The goal of activities of the Self-Regulatory Organisation of Administrators shall be to contribute to the transparency and efficiency of the activities of its members, protection of collective interests, elaboration and application of rules of conduct of its members based on the rules prescribed by Article 23.1 of this Law, as well as the implementation of the powers prescribed by this Law.
6. The Self-Regulatory Organisation of Administrators shall have the right to:
(a) represent and protect the rights of administrators;
(b) adopt procedures and rules for the application of rules of professional ethics, advise on the application of the rules of conduct of administrators based on the application of an administrator;
(c) initiate disciplinary proceedings against its members and apply penalties as prescribed by law;
(d) (sub-point repealed by HO-13-N of 22 December 2010);
(e) carry out other operations and activities not prohibited by the legislation.
(Article 26 amended by HO-231-N of 8 December 2010, supplemented, amended by HO-13-N of 22 December 2010, HO-105-N of 17 June 2016, edited, amended, supplemented by HO-294-N of 12 December 2019)
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Article 26.1. |
Training of administrators |
1. For the purpose of ensuring the ongoing professional development of administrators, the Self-Regulatory Organisation of Administrators shall organise and conduct annual mandatory trainings for persons having the qualification of administrator, with a minimum duration of at least 24 academic hours.
2. The person may be deemed as having undergone the mandatory trainings prescribed by part 1 of this Article, when in the cases provided for by the procedure defined by the Minister of Justice of the Republic of Armenia has participated in other equivalent courses, classes or trainings.
3. The procedure for holding annual mandatory trainings shall be defined by a secondary regulatory legal act of the Minister of Justice of the Republic of Armenia.
(Article 26.1 supplemented by HO-294-N of 12 December 2019)
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Article 27. |
Property and governing bodies of the Self-Regulatory Organisation of Administrators |
1. Property transferred to the Self-Regulatory Organisation of Administrators by its members (founders) shall be the ownership thereof. The members shall not bear responsibility for the liabilities of the Self-Regulatory Organisation. The Self-Regulatory Organisation of Administrators shall not bear responsibility for the liabilities of its members. The members shall pay regular fees for membership, the amount whereof shall be determined at the general meeting of members of the Self-Regulatory Organisation of Administrators. The Self-Regulatory Organisation of Administrators shall determine the size of the membership fee or any other fee charged from its members in coordination with the Ministry of Justice of the Republic of Armenia and presenting relevant calculations substantiating the size of the fee in the cases where the size of the lump-sum fee exceeds one hundred-fold of the minimum salary, and the size of monthly fee — in case of a regular fee — exceeds the ten-fold of the minimum salary. The Ministry of Justice of the Republic of Armenia shall reject it, where the proposed size of the fee is not substantiated.
2. The highest governing body of the Self-Regulatory Organisation of Administrators shall be the General Meeting of its members, which shall carry out the management of the Organisation by convening annual or extraordinary meetings. The General Meeting shall have quorum where two thirds of the members participate therein. At the General Meeting, decisions shall be adopted by a simple majority of votes of participants, and with regard to matters of exclusive jurisdiction of the General Meeting — by at least two thirds of the total number of all members. Matters of exclusive jurisdiction of the General Meeting shall be:
(a) adoption of the charter, rules, procedures of the Self-Regulatory Organisation and making amendments thereto;
(b) deprivation of the member of the Self-Regulatory Organisation from membership;
(c) election of the Observer Board, members and the head of the Supervision Service of the Self-Regulatory Organisation and termination of their powers;
(d) approval of annual reports on the activities of the Self-Regulatory Organisation;
(e) other matters prescribed by the charter of the Self-Regulatory Organisation;
(f) defining the membership fee amount of the Self-Regulatory Organisation.
3. The Observer Board of the Self-Regulatory Organisation of Administrators shall elect or appoint an executive body, exercise other powers vested therein by the charter and decisions of the Meeting. The number of members and the procedure for activities of the Observer Board shall be prescribed by the charter. Matters of the jurisdiction of the Observer Board may not be transferred to the executive bodies. A member of the Observer Board may not be an executive director or a member (head) of the executive body or a member (head) of the Disciplinary Commission at the same time.
4. The executive director or the administration and the head of administration must have a certificate of qualification issued by the state authorised body, but shall organise the works of the Self-Regulatory Organisation and be accountable to the Observer Board. The competences of the executive body shall be prescribed by the charter of the Self-Regulatory Organisation. The executive director, member or head of administration must have a certificate of qualification issued by the state authorised body, but may not be a member of the Disciplinary Commission at the same time.
5. The Disciplinary Commission shall — upon existence of grounds for disciplinary liability prescribed by this Law — initiate disciplinary proceedings against the administrator and apply disciplinary penalties. A member of the Disciplinary Commission may not be at the same time a member of the Observer Board, executive director or member of administration of employee of the executive body at the same time.
(Article 27 amended by HO-231-N of 8 December 2010, edited, supplemented by HO-13-N of 22 December 2010, amended, supplemented, edited by HO-294-N of 12 December 2019)
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Article 27.1. |
Supervision over administrators and the Self-Regulatory Organisation of Administrators |
1. The Ministry of Justice of the Republic of Armenia shall maintain supervision over observance by administrators and the Self-Regulatory Organisation of Administrators of requirements of this Law, other legal acts and the statutory requirements of the Self-Regulatory Organisation of Administrators.
2. An administrator and the Self-Regulatory Organisation of Administrators shall submit an annual statistical report on their activities to the Ministry of Justice of the Republic of Armenia by 1 March following the reporting year.
3. The statistical report submitted by an administrator shall include information on cases conducted by the administrator, the number of cases, including on cases of financial recovery, elements of false and intentional bankruptcy revealed by him or her through financial analysis, information on his or her workplace and employees, as well as other statistical data.
4. The report submitted by the Self-Regulatory Organisation of Administrators shall include information on disciplinary proceedings initiated, trainings held by the organisation, the number of members and information on its members.
5. The forms and procedure for submission of the reports provided for by this Article shall be prescribed by the secondary regulatory legal act of the Minister of Justice of the Republic of Armenia.
(Article 27.1 supplemented by HO-294-N of 12 December 2019)
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Article 27.2. |
Disciplinary liability of the administrator |
1. Grounds for applying disciplinary liability against the administrator shall be:
(1) committing, intentionally or by gross negligence, an obvious violation of the requirements of law or other secondary regulatory legal act while exercising his or her powers;
(2) violating the professional rules of conduct of administrators.
2. Within the meaning of this Article:
(1) obvious violation shall be the violation of requirements of law or other secondary regulatory legal acts committed by the administrator while performing his or her activities, which may not be doubted by any reasonable legal assumption or argument;
(2) the violation shall be considered as committed with intent, where the administrator has realised the unlawful nature of his or her conduct;
(3) the violation shall be considered as committed by gross negligence, where the administrator has failed to realise the unlawful nature of his or her conduct, although he or she could and should have realised it in such a situation.
3. Disciplinary proceedings shall be initiated against the administrator by the Minister of Justice of the Republic of Armenia on the ground prescribed by point 1 of part 1 of this Article.
4. Disciplinary proceedings shall be initiated against the administrator by the Self-Regulatory Organisation of Administrators on the ground prescribed by point 2 of part 1 of this Article.
5. Subjecting the administrator to administrative, civil law or other liability provided for by law does not preclude the possibility of subjecting him or her to disciplinary liability and terminating his or her powers and vice versa.
(Article 27.2 supplemented by HO-294-N of 12 December 2019)
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Article 27.3. |
Initiating disciplinary proceedings against an administrator |
1. The reasons for initiating disciplinary proceedings against an administrator shall be the following:
(1) detection of a violation serving a ground for disciplinary liability by persons initiating proceedings;
(2) the application of the Self-Regulatory Organisation of Administrators;
(3) report of a person, state and local self-government body, official.
2. Anonymous reports shall not be considered.
3. The disciplinary proceedings may be initiated:
(1) on the ground of obvious violation of requirements of law or other secondary regulatory legal acts committed by the administrator when exercising his or her powers — within a period of one year after the alleged violation has become known to the body initiating the proceedings. Where the alleged violation has been revealed before the closure of the bankruptcy case, the time limit provided for by this point shall be calculated from the moment of closure of the bankruptcy case;
(2) on the ground of violation of professional rules of conduct — within a period of three months after the alleged violation has become known to the body initiating the proceedings, but no later that within a year from the moment that ground came into existence.
4. In the case prescribed by point 1 of part 3 of this Article, the disciplinary proceedings may not be initiated, where two years have elapsed since the alleged violation, and where the violation has been committed before the closure of the bankruptcy case — from the moment of closure of the bankruptcy case.
5. Before termination of disciplinary proceedings, the administrator against whom disciplinary proceedings have been initiated, shall have the right to get familiarised with the materials of proceedings, give explanations, file a motion for conducting additional studies.
6. During the initiated proceedings the initiator of proceedings shall require from the administrator provision of materials necessary for disciplinary proceedings, which shall be provided during a week. Upon the motion of the administrator, that time limit may be extended for one more week.
7. The disciplinary proceedings shall be carried out within a period of three months.
8. In exceptional cases, the time limit of the disciplinary proceedings shall be extended by the decision of the body having initiated the disciplinary proceedings for no more than three months, and in case of assigning an expert examination — for a time limit necessary for the expert examination.
9. In case the Self-Regulatory Organisation of Administrators initiates disciplinary proceedings against an administrator, the Self-Regulatory Organisation of Administrators shall inform the Ministry of Justice of the Republic of Armenia on the fact of initiating the proceedings, as well as the results thereof.
(Article 27.3 supplemented by HO-294-N of 12 December 2019, amended by HO-89-N of 3 March 2021)
(Law HO-89-N of 3 March 2021 has a transitional provision)
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Article 27.4. |
Circumstances excluding initiation of disciplinary proceedings against an administrator |
1. The body initiating disciplinary proceedings shall not initiate proceedings for subjecting the administrator to disciplinary liability, and the initiated proceedings shall be terminated, where:
(1) the grounds and elements of disciplinary violation are absent;
(2) the time limits prescribed by Article 27.3 of this Law have expired, where the administrator agrees to termination of proceedings on the mentioned ground;
(3) the qualification of the administrator has been terminated;
(4) the bankruptcy case has not been closed yet, except for the cases when the ground specified by point 2 of part 1 of Article 27.2 of this Law exists, as well as the cases when the powers of the administrator have been early terminated;
(5) the Court has — by referring to the circumstance which was the ground for applying disciplinary liability — confirmed within the scope of the bankruptcy case that it exists or is missing;
(6) there is a disciplinary proceeding against the same person initiated on the same ground or a there exists a decision on not initiating disciplinary proceeding, terminating it or subjecting to disciplinary liability, except for the cases when disciplinary proceedings have not been initiated due to failure to close the bankruptcy case or the initiated proceedings have been terminated;
(7) before rendering a decision on subjecting to disciplinary liability the administrator has eliminated the circumstances serving as a ground for initiating disciplinary violation.
2. The body initiating disciplinary proceedings shall transfer relevant materials regarding the grounds for initiating proceedings to another body initiating disciplinary proceedings, where it finds that grounds regarding the jurisdiction of that body exist.
3. Where disciplinary proceeding is not initiated or it is terminated on the ground of point 4 of part 1 of this Article, the body initiating disciplinary proceeding shall transfer relevant materials regarding the grounds for initiating the proceeding to the Court for it to consider, within the scope of its powers prescribed by Article 32 of this Law, the issue on early termination of powers of the administrator.
4. In case of failure to initiate a disciplinary proceeding on the basis of reports of natural and legal persons, the body initiating proceedings shall indicate in its response the grounds for not initiating proceedings.
(Article 27.4 supplemented by HO-294-N of 12 December 2019, HO-89-N of 3 March 2021)
(Law HO-89-N of 3 March 2021 has a transitional provision)
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Article 27.5. |
Disciplinary penalties applied against the administrator |
1. One of the following disciplinary penalties may be applied against the administrator on the grounds provided for by Article 27.2 of this Law:
(1) warning;
(2) reprimand;
(3) severe reprimand;
(4) termination of qualification.
2. The Self-Regulatory Organisation of Administrators may apply only the disciplinary penalties provided for by points 1 and 2 of part 1 of this Article.
3. The disciplinary penalty provided for by point 4 of part 1 of this Article may be applied in case of disciplinary violation committed by an administrator having two warnings or one severe reprimand.
4. Where the administrator is not subjected to disciplinary liability within three months, six months and one year after applying a warning, reprimand and severe reprimand respectively, it shall be deemed that no disciplinary penalty has been applied to the administrator.
5. The disciplinary penalty applied to the administrator must be proportionate to the violation committed. When applying a disciplinary penalty, the consequences of the violation, the personality of the administrator, the degree of the guilt, existing penalties and other noteworthy circumstances characterising the administrator shall be taken into account.
6. The decision on subjecting the administrator to disciplinary liability may be sent to the administrator within a period of three days after it has been rendered.
7. The decision on subjecting to disciplinary liability may be appealed in court within a two-month period after entry into force of the decision.
(Article 27.5 supplemented by HO-294-N of 12 December 2019)
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Article 28. |
Expelling the administrator from the Self-Regulatory Organisation of Administrators |
(title edited by HO-294-N of 12 December 2019)
1. The Self-Regulatory Organisation of Administrators shall expel the administrator from the organisation, where severe reprimand has been applied against the administrator twice within the last one year as a type of disciplinary penalty.
2. The decision on expelling the administrator from the Self-Regulatory Organisation shall, within a period of three days after it has been rendered, be forwarded to the administrator and the Ministry of Justice of the Republic of Armenia.
3. If the administrator has no disciplinary penalty after expelling him or her from the Self-Regulatory Organisation, the administrator may become a member of the Self-Regulatory Organisation.
(Article 28 amended by HO-231-N of 8 December 2010, edited by HO-294-N of 12 December 2019)
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Article 29. |
Powers of the administrator |
1. The appointed bankruptcy administrator shall:
(a) upon the request of the Court, on own initiative or at the request of creditors holding more than five percent of the claims registered against the debtor, convene a Meeting of Creditors and preside over it.
Where the Meeting of Creditors is convened with respect to the matter of filing a motion with the Court for dismissing the administrator, the meeting shall be presided over by the largest creditor present at the meeting, having the right to vote;
(b) file a bankruptcy application with the Court in cases provided for by this Law;
(c) apply to courts on behalf of the debtor on matters requiring a solution through judicial procedure, engage in court sessions of the debtor, wherein the latter acts as a claimant, defendant or a third party with independent claims against the subject of the dispute, and act on behalf of the debtor without a letter of authorisation;
(d) for the purpose of ensuring proper exercise of his or her powers, involve, and in case of a debtor who complies with the criteria prescribed by the secondary legal act of the Minister of Justice of the Republic of Armenia, be obliged to involve upon the decision of the Meeting of Creditors, relevant professional organisations or specialists and other employees and pay them at the expense of the debtor;
(e) arrange inventory, undertake measures for ensuring the maintenance of the property belonging to the debtor;
(f) analyse the financial situation of the debtor, reasons for bankruptcy, as well as the financial, economic and investment activities of the debtor and the state thereof in the commodity market;
(g) maintain the register of creditors’ claims;
(h) check the substantiation of claims against the debtor;
(i) open a special bankruptcy account in the name of the debtor in one of the banks operating in the Republic of Armenia, and credit to that account all monetary funds received in the name of the debtor;
(i.1) open — for the purpose of collecting money to be levied from the participants of electronic auctions organised under all cases run thereby — one monetary account in his or her name at one of the banks operating in the Republic of Armenia, and that account shall have the status of special bankruptcy account, and after the end of the auction, transfer the funds credited with regard to each property to the special bankruptcy account opened under the relevant bankruptcy case with regard to the particular property;
(j) put a lien on the property and monetary funds belonging to the debtor based on a court decision or remove the lien, in which case the writ of execution drawn up on the basis thereof shall be immediately forwarded for compulsory enforcement;
(j.1) file with the Court a motion on declaring search for the property of the debtor, by attaching the infeasibility grounds to detect the property, in case of granting whereof the writ of execution drawn up on the basis thereof shall be immediately forwarded for compulsory enforcement;
(k) exercise supervision over the performance of duties by the executive of the debtor;
(k.1) apply — as prescribed by law — for registering the restrictions applied to the movable property;
(k.2) respond to the applications and requests of the debtor or creditor within a period of 5 working days after receipt of the application or request, unless other time limit has been prescribed by law, as well as upon the request of the debtor or creditor or the financing person engaged by the financial recovery plan of the debtor, provide information thereto on the bankruptcy proceedings or financial recovery of the debtor within maximum three working days after receiving the written request;
(k.3) each quarter, by the 15th day of the month following the reporting quarter, submit a report to the Court on the actions undertaken by him or her in the bankruptcy case during the preceding period and on the course of the bankruptcy case, by attaching relevant documents if necessity;
(k.4) upon the request of the creditor, provide information to him or her on the activities carried out by the debtor, his or her financial state, including on inventoried assets and liabilities;
(l) exercise other powers prescribed by law.
2. The administrator shall be exempt from the payments of the state duty for filing statements of claims, applications, appeals and cassation appeals submitted within the scope of his or her powers prescribed by this Law.
3. While exercising his or her powers, the administrator shall act in the name of the debtor and at own responsibility, unless otherwise prescribed by this Law .
4. (part repealed by HO-294-N of 12 December 2019)
5. (part repealed by HO-27-N of 16 January 2024)
6. The procedure for administering the bankruptcy case by the administrator shall be prescribed by a secondary regulatory legal act of the Minster of Justice of the Republic of Armenia.
7. While exercising his or her powers, the administrator may obtain information from other bodies or persons via the unified electronic information system.
8. The procedure for obtaining information via the unified electronic information system shall be prescribed by the Government.
9. The administrator shall, within the scope of his or her powers prescribed by this Law, forward by registered letter the notifications to the debtor and creditors, as well as all those persons (pledgor, surety, guarantor) whose rights and lawful interests are or may be affected by the bankruptcy proceedings, as prescribed by parts 1-4 of Article 95 of the Civil Procedure Code of the Republic of Armenia, hand them in person or send them via means of electronic communication. Persons defined by this part may inform the administrator in writing of the means of communication used by them, including the e-mail address, by requesting notification via those means of communication, and shall bear the unfavourable consequences of failure to read the notification sent to the means of electronic communication provided by them. Where the person has refused to receive the notification or where the notification sent to the address mentioned by the person has been returned or where the confirmation of the notification (acknowledgement of receipt) has not been received within a two-week period from the sending date or if the address of the person is unknown, notifications shall be carried out as prescribed by parts 5 and 6 of Article 95 of the Civil Procedure Code of the Republic of Armenia. The provisions provided for by this part shall apply, unless otherwise provided for by this Law.
(Article 29 amended by HO-231-N of 8 December 2010, supplemented, edited by HO-13-N of 22 December 2010, supplemented by HO-105-N of 17 June 2016, supplemented, amended, edited by HO-294-N of 12 2019, supplemented by HO-580-N of 23 December 2022, supplemented, edited, amended by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 29.1. |
Suspension of activities of the administrator |
1. Activities of the administrator shall be suspended:
(1) for the whole term of public service, if the administrator has joined public service:
(1.1) for the whole term of public service, if the administrator is a public servant;
(2) until the expiry of the term of the service, if the administrator has been called up for compulsory fixed-term military service;
(3) if the administrator is unable to fulfil professional duties due to his or her health condition more than for one year, but not to exceed five years, provided that there are relevant documents certifying the administrator’s health condition;
(4) if the administrator has been declared as missing, as prescribed by law;
(5) if the administrator has been declared bankrupt by the court judgment having entered into legal force;
(6) if the administrator has failed to conclude the insurance contract within the established time limit;
(7) if the administrator has withdrawn from the Self-Regulatory Organisation of Administrators upon his or her application and has failed to become a member of any Self-Regulatory Organisation of Administrators within a period of one month;
(8) if the administrator has been expelled from the Self-Regulatory Organisation of Administrators by the decision of the general meeting of Self-Regulatory Organisation of Administrators;
(9) if the administrator has been removed from registration as an individual entrepreneur.
2. The administrator shall, within a period of ten days, be obliged to inform the Ministry of Justice of the Republic of Armenia and the Self-Regulatory Organisation of Administrators about existence of grounds provided for by points 1, 2, 3 and 5-9 of part 1 of this Article, attaching the relevant documents confirming the grounds for suspension. Activities of the administrator shall be suspended on the ground provided for by point 1.1 of part 1 of this Article, where the administrator fails to submit to the Ministry of Justice of the Republic of Armenia relevant documents certifying the elimination of the ground for suspension within a 10-day period upon receipt of the qualification certificate.
3. The activities of the administrator shall be suspended by the Minister of Justice of the Republic of Armenia. The decision on suspension of activities of the administrator shall, within a period of three days following the rendering thereof, be sent to the appropriate administrator, Self-Regulatory Organisation of Administrators, as well as the Judicial Department to notify the courts thereon and shall be published on the official website of the Ministry of Justice of the Republic of Armenia.
4. In case of suspension of the activities of the administrator, the validity of the qualification certificate of the administrator shall be deemed suspended.
5. The decision on suspension of the activities of the administrator may be appealed to the Court within a period of two months following entry into force of the decision.
6. After elimination of the grounds provided for by part 1 of this Article the administrator may apply to the Ministry of Justice of the Republic of Armenia for resuming his or her activities, by attaching relevant documents to the application. The Minister of Justice of the Republic of Armenia, within a period of three days after receipt of the application, shall arrange for resuming the activities of the administrator.
(Article 29.1 supplemented by HO-105-N of 17 June 2016, edited by HO-294-N of 12 December 2019, amended, supplemented, edited by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 29.2. |
Termination of qualification of the administrator |
1. The Minister of Justice of the Republic of Armenia shall terminate the qualification of the administrator, where:
(1) the administrator has submitted relevant application;
(2) the administrator has attained the age of 65, and in the case provided for by part 3 of this Article, the additional time limit provided for continuation of activities of the administrator has expired;
(3) the administrator has passed away, has been declared having no or limited active legal capacity or dead by the court judgment having entered into legal force;
(4) a judgement on conviction rendered against him or her for intentional crime, or involving punishment that entails deprivation of liberty has entered into legal force;
(5) termination of qualification has been applied to the administrator as a disciplinary penalty;
(6) the judicial act on compensation for the damage caused to the creditor or debtor due to exercising by the administrator of his or her duties, has not been executed within three months;
(7) the powers of the administrator have been early terminated for three times by the Court in accordance with the procedure provided for by Article 32 of this Law for the failure to exercise or for improper exercise of his or her powers established by this Law;
(8) in case of being selected as an administrator he or she has refused at least three times during the preceding one year to perform his or her obligations on a ground not provided for by this Law;
(9) he or she has obtained the qualification of bankruptcy administrator in violation of the requirements of law;
(10) he or she has not been a member of any self-regulatory organisation of administrators within three consecutive years after being granted qualification;
(11) after suspension of the activities of the administrator on the grounds provided for by points 2 and 3 of part 1 of Article 29.1 of this Law, the grounds for suspension have not been eliminated within the prescribed time limit;
(12) the judgment on declaring the administrator as missing has not been abolished within five years after suspension of the activities of the administrator on the ground provided for by point 4 of part 1 of Article 29.1 of this Law;
(13) the bankruptcy proceeding has not been closed within three years after suspension of the activities of the administrator on the ground provided for by point 5 of part 1 of Article 29.1 of this Law;
(14) the administrator has failed to conclude an insurance contract within a year after suspension of the activities of the administrator on the ground provided for by point 6 of part 1 of Article 29.1 of this Law;
(15) the administrator has failed to become a member of any self-regulatory organisation of administrators after suspension of the activities of the administrator on the ground provided for by point 7 or point 8 of part 1 of Article 29.1 of this Law within a year or two years, respectively;
(16) the administrator has failed to register as an individual entrepreneur within a year after suspension of the activities of the administrator on the ground provided for by point 9 of part 1 of article 29.1 of this Law.
2. The qualification of the administrator shall be terminated:
(1) from the date of entry into force of the decision on termination of the qualification in cases provided for by points 1 and 5-16 of part 1 of this Article;
(2) from the date the administrator attains the age of 65 or the date of expiry of the additional time limit provided for continuing his or her activities, respectively, in cases provided for by point 2 of part 1 of this Article;
(3) from the date of death of the administrator or entry into legal force of the judicial act in cases provided for by points 3 and 4 of part 1 of this Law, respectively.
3. At least a month before attaining the age of holding office of the administrator, the Minister of Justice of the Republic of Armenia shall, on the basis of the application filed by the administrator, allow the administrator to further engage in the activities of the administrator for a period of up to five years, if the administrator is involved in bankruptcy proceedings in progress. In the case provided for by this part the person entitled to continue his activities of the administrator upon permission granted by the Minister of Justice of the Republic of Armenia may not participate in the selection of an administrator and be appointed a temporary bankruptcy administrator or administrator after obtaining the mentioned permission.
4. In case of termination of qualification of the administrator, the certificate of qualification issued to him or her shall be announced as invalid.
5. The administrator whose qualification has been terminated shall be obliged to transfer the documents in the current bankruptcy case maintained with him to the new administrator not later than within one week after a new administrator for the given bankruptcy case is appointed.
6. The decision on termination of the activities of the administrator shall be forwarded to the administrator within a period of three days after rendering it.
7. The decision on termination of the qualification of the administrator may be appealed against in the Court within a period of two months after entry into force of the decision.
(Article 29.2 supplemented by HO-105-N of 17 June 2016, edited by HO-294-N of 12 December 2019, amended by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 30. |
Remuneration of the administrator |
1. The remuneration shall be paid to the administrator from the funds of the debtor, means generated from sale (alienation) of the property or collection of assets (including receivables) of the debtor or a third party, as well as other means envisaged by this Law.
2. Where, in cases provided for by this Law, no other size of remuneration for an administrator is envisaged, the remuneration of the administrator shall be defined by the following interest rates calculated against granted claims of creditors:
(1) 10 per cent, where the amount does not exceed AMD 25 million;
(2) AMD 2 500 000 plus 8 per cent of the amount in excess of AMD 25 million, where the amount is AMD 25-50 million;
(3) AMD 4 500 000 plus 3 per cent of the amount in excess of AMD 50 million, where the amount is AMD 50-100 million;
(4) AMD 6 000 000 plus 2 per cent of the amount in excess of AMD 100 million, where the amount is AMD 100-500 million;
(5) AMD 14 000 000 plus 1 per cent of the amount in excess of AMD 500 million, where the amount is more than 500 million.
3. In case of financial recovery of the debtor, the amount of remuneration shall be prescribed in the amount of five to ten per cent of the amount of granted claims of creditors during the implementation of the financial recovery plan, and in case of successful completion of the financial recovery plan and financial recovery of the debtor, a bonus in the amount of five to ten per cent shall be paid to the administrator, as prescribed by the financial recovery plan.
4. In case the bankruptcy proceeding lasts up to six months counting from the time of rendering a decision on initiating liquidation proceedings in regard to the debtor and until the time of rendering a judgment on closure of the bankruptcy case, and where the duration of the bankruptcy proceedings is up to six months — in case a natural person goes bankrupt — counting from the day of the first Meeting of Creditors and until the time of rendering a judgment on closure of the bankruptcy case (regardless of the period of financial recovery) the administrator shall receive a bonus:
(1) in the amount of 20 per cent of the calculated remuneration, in case of claims granted in the amount defined in points 1 and 2 of part 2 of this Article;
(2) in the amount of 50 per cent of the calculated remuneration, in case of claims granted in the amount defined in points 3-5 of part 2 of this Article.
5. In case the duration of the proceeding exceeds the time limits indicated in part 4 of this Article, the interest rate of the bonus provided for by point 1 of part 4 of this Article for each successive six months shall decrease in 5 percentage points, and the interest rate of the bonus provided for by point 2 of part 4 of this Article — in 10 percentage points.
6. Where a bankruptcy case closes by granting the claims of creditors and the administrator has collected assets exceeding in size the claims of creditors, the administrator shall also receive a bonus in the amount of 5 per cent of the part exceeding the amount of the recorded claims of the creditors.
7. In cases of early termination of powers of the administrator as prescribed by this Law (except for the cases where the powers of the administrator have been terminated on the grounds of failure to execute or improper execution of his or her powers, as well as on the ground of termination of qualification as provided for by points 5-9 of part 1 of Article 29.2 of this Law), rejection of the application for bankruptcy or termination of the case proceeding, waiving by the creditors of claims, extension of the time limit for executing on such claims, as well as in cases where no claims have been filed, as a result whereof the size of liabilities has become less than two thousand-fold of the minimum salary, or where there is no default on any liability in excess of ninety days, issues related to remuneration of the administrator adequate to the work time shall be determined by the Court in accordance with part 4 of Article 21 of this Law.
8. In case of closure of the bankruptcy case on the grounds provided for by points “a” and “b” of part 1 of Article 105 of this Law, as well as closure of the bankruptcy case on other grounds and where the property of the debtor is less than fifty-fold of the minimum salary, compensation from the State Budget of the Republic of Armenia in the amount prescribed by Article 1 of the Law of the Republic of Armenia “On the minimum monthly salary” shall be paid to the administrator within a period of one month after closure of the bankruptcy case.
9. In case of early termination of the powers of the administrator, remuneration and compensation for administrative expenses shall be made after all documents relating the bankruptcy proceedings have been transferred to the new administrator on the basis of a transfer and acceptance act.
(Article 30 supplemented, edited by HO-13-N of 22 December 2010, edited by HO-105-N of 17 June 2016, amended by HO-298-N of 21 December 2017, edited by HO-294-N of 12 December 2019, amended by HO-445-N of 18 September 2020, HO-89-N of 3 March 2021, HO-27-N of 16 January 2024)
(Law HO-445-N of 18 September 2020 has a transitional provision)
(Law HO-89-N of 3 March 2021 has a transitional provision)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 31. |
Disputing the actions (omission) of the administrator |
1. The debtor and the creditor (creditors) may appeal against the actions or omission of the administrator before a judge. The appeal may be filed with the Court within a period of ten days from the day when the appellant has learnt or should have learnt about the violation of his or her right.
2. The appellant shall — when filing an appeal with the Court — also submit evidence certifying the fact that the carbon copy of the appeal has been forwarded to the administrator. The administrator may file objections to the Court in regard to the appeal within a period of three days after receipt of the carbon copy of the appeal. The Court shall, within a period of seven days after receipt of the appeal, examine it and render a decision on rejecting the appeal or fully or partially granting the appeal and declaring the action (omission) of the administrator as fully or partially illegitimate. The Court shall inform the appellant and the administrator about the decision rendered. The decision of the Court shall be subject to appeal by the appellant or the administrator.
3. The appeal shall not suspend the actions of the administrator.
4. The actions of the administrator may not be appealed against in other courts.
5. The issue of elimination of consequences of actions (omissions) of the administrator may not be addressed within the scope of disputing the actions (omissions) of the administrator.
6. The request for elimination of consequences of actions (omissions) of the administrator may be filed by any interested person within the scope of a separate claim.
(Article 31 supplemented by HO-13-N of 22 December 2010, dated, supplemented by HO-294-N of 12 December 2019)
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Article 32. |
Early termination of powers of the administrator |
1. The Court shall — on own initiative, upon the motion of the Board of Creditors, Meeting of Creditors, the creditor or the debtor — early terminate the powers of the administrator, where the latter fails to perform or performs improperly his or her powers prescribed by this Law, where qualification of the administrator has been terminated as prescribed by law or his or her activities have been suspended, as well as in other cases provided for by this Law.
2. Prior to rendering a decision on the issue of early termination of powers of the administrator on the ground of failure to perform or improper performance by the administrator his or her obligations, the Court shall notify the administrator thereon, proposing the latter to express his or her position within a period of three days after receipt of the notification, by concurrently providing reasonable time limit in the decision for elimination of such violations, where it is possible to eliminate them. If the administrator eliminates the violations and submits to the Court relevant evidence thereon within the established time limit, his or her powers shall not be early terminated.
3. In case the Court renders a decision on early termination of powers of the administrator, the relevant decision shall be immediately forwarded to the administrator, the debtor and the creditor, as well as to the Ministry of Justice of the Republic of Armenia.
4. The court shall, upon its initiative, early terminate the powers of a newly appointed administrator, where as a result of appeal, the decision on early termination of the powers of the administrator appointed earlier on the ground of this Article has been abolished.
(Article 32 amended by HO-231-N of 8 December 2010, edited, supplemented by HO-13-N of 22 December 2010, edited by HO-294-N of 12 December 2019, supplemented by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
CHAPTER 5
THE MEETING OF CREDITORS AND THE BOARD OF CREDITORS
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Article 33. |
Meeting of Creditors |
1. All creditors having appeared at the first Meeting of Creditors may participate in the Meeting of Creditors (hereinafter referred to as “Meeting”) with a right to vote. The rest of the creditors shall participate in subsequent Meetings with a consultative vote, except for the creditor having failed to participate in the first Meeting of Creditors, but having the largest claim in the overall claims in cases prescribed by the second paragraph of part 5 of this Article.
Where the claim of the creditor has been objected partially, he or she may participate in the first Meeting. In that case the vote of the given creditor shall be counted in the non-objected part.
Where there is one creditor in the bankruptcy case, decisions on issues of the jurisdiction of the Meeting shall be rendered by that creditor.
2. At the Meeting, the debtor shall be obliged to answer any question of the administrator and the creditors, related to his or her financial and economic activities.
3. The Meeting shall be held in person — by the gathering of persons entitled to participate in the Meeting in one place, or remotely — through the use of other means of electronic communication or electronic system, or through written enquiries. The Meeting shall be convened and presided over by the administrator, except for the cases provided for by point “a” of part 1 of Article 29.
Where an objection to holding the Meeting of Creditors remotely is submitted, the Meeting shall be held in person.
Minutes of the remote Meeting — through the use of other means of electronic communication — and the documents submitted attached thereto may be drawn up and submitted electronically. The documents to be signed by the participants of the Meeting shall be submitted with the availability of electronic signature, and other documents — in the scanned version.
4. The following shall fall within the exclusive competence of the Meeting:
(a) approval of the financial recovery plan and submission of a recommendation to the Court on the extension of the period for the implementation of the plan;
(b) approval of the composition of the Board of Creditors and early termination of powers of the Board or its specific members;
(c) adoption of its statute;
(d) adoption of other decisions vested in the exclusive jurisdiction of the Meeting by this Law.
5. Creditors (creditor) having appeared at the first Meeting of Creditors shall have 100 percent of the votes at the Meeting, which shall be distributed among them in proportion to their claims approved and registered in the register.
In case the creditor, having failed to appear at the first Meeting and having registered the largest claim in the total volume of the claims, appears at the subsequent Meetings, creditors having appeared at the first Meeting and that creditor shall have the 100 per cent of the votes at the given Meeting, in proportion to their claims.
The right to vote of the creditor (creditors) shall be retained in the unsatisfied part of the claim. Where the claim of the creditor having the right to vote has been fully satisfied, the creditor shall lose the right to vote. In those cases, creditors with unsatisfied claims, indicated in the first and second paragraphs of this part shall have 100 per cent of the votes of the Meeting, which shall be distributed among them in proportion to their claims approved or recorded in the register.
6. In case of a due notification of the venue and the time of holding the first Meeting, the Meeting shall have quorum, irrespective of the number of votes of creditors (creditor) represented therein.
Subsequent meetings shall have quorum where creditors (creditor) having a simple majority of votes conferring the right to vote participate therein.
7. Sittings of the Meeting shall be minuted. The administrator shall sign the minutes of the Meeting, and a copy thereof shall be submitted to the Court on the following day of holding the Meeting.
8. The following shall be attached to the minutes of the Meeting:
(a) the register of claims of creditors as of the day of holding the Meeting (minutes of the first Meeting only);
(b) registration forms of the participants of the Meeting;
(c) ballots;
(d) letters of authorisation of participants of the Meeting or other documents certifying the powers thereof;
(e) documents submitted by participants of the Meeting for consideration at the Meeting;
(f) evidence certifying due notification of creditors of the venue and time of holding the Meeting;
(g) other documents.
9. (part repealed by HO-27-N of 16 January 2024)
(Article 33 supplemented by HO-294-N of 12 December 2019, amended, supplemented by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 34. |
Notification of the Meeting |
1. The administrator must duly notify creditors and the debtor having the right to participate in the Meeting of the place and time of holding the Meeting.
The notification shall be sent by a registered letter with advice of delivery or by other means of communication ensuring formulation of message, or by means of the electronic system or delivered with a receipt, and the citizens before whom the debtor bears responsibility for causing damage to their life or health (where available) shall be notified of the first Meeting of Creditors by a registered letter as well.
In case the number of creditors having the right to participate in the Meeting is more than 10 or of absence of information necessary for notifying the person having the right to participate in the Meeting, as well as for creditors having the right to participate in the Meeting (with a consultative vote), the announcement published on the official website of public notifications of the Republic of Armenia at http://www.azdarar.am shall be deemed to be a due notification.
2. Persons having the right to be present at the Meeting must be notified no later than 3 days before the day of convening the Meeting, and in cases provided for by the third paragraph of part 1 of this Article, the announcement must be published 5 days before the day of convening the Meeting.
3. The notification of the in person Meeting shall contain:
(a) the name (title) and address of the place of residence (location) of the debtor;
(b) bankruptcy case number;
(c) year, month, day, time and address of venue of convening the Meeting;
(d) issues on the agenda of the Meeting, contents of the issues to be put to vote;
(e) procedure for getting acquainted with the information and materials relating to the issues to be considered at the Meeting;
(f) procedure for registration of participants of the Meeting;
4. Notification on holding the remote Meeting through the use of other means of electronic communication shall contain:
(a) the name (title) and address of the place of residence (location) of the debtor;
(b) bankruptcy case number;
(c) the procedure and deadline for record-registration of debtors (only in case of the first Meeting);
(d) issues on the agenda of the Meeting, contents of the issues to be put to vote;
(e) year, month, day and time of convening the Meeting.
5. Notification on the Meeting being held through written inquiries shall, in addition to the requirements referred to in points “a”-“d” of part 4 of this Article, also contain the materials related to the issues on the agenda and the ballot paper on which the procedure and deadline for forwarding the filled out ballot papers to the administrator must be indicated.
(Article 34 amended by HO-143-N of 19 March 2012, supplemented by HO-294-N of 12 December 2019, supplemented, edited by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 35. |
Procedure for convening the Meeting |
1. The Meeting shall be convened by the administrator at his or her initiative or at the request of the creditor (creditors) having 5 and more per cent of votes. The Meeting shall be convened at the initiative of the creditor, where the latter covers the expenses for organising and holding the Meeting. The expenses for the Meetings convened at the initiative of the administrator shall be covered at the expense of the debtor.
2. Issues proposed on the agenda, which are included on the agenda of the Meeting without voting, shall be indicated in the request on convening a Meeting.
The administrator shall not have the right to change the formulations of the issues on the agenda of the Meeting convened upon the request of the creditors.
3. The administrator shall hold the Meeting convened upon the request of the creditor (creditors) no later than within two weeks after the receipt of the request for convening a Meeting. The creditor (creditors) requesting to convene the Meeting shall be obliged to compensate for the expenses for the Meeting held upon his or her request no later than within one week after submitting a request for holding the Meeting, based on the estimate submitted by the administrator. Funds transferred for the Meeting convened upon the request of the creditor (creditors) and not used shall be returned to the creditor (creditors) within 3 days from the completion of the Meeting.
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Article 36. |
Procedure for adopting decisions of the Meeting |
1. Decisions of the Meeting shall be adopted by simple majority of votes of creditors having appeared at the Meeting and having the right to vote, unless otherwise provided for by this Law.
2. The administrator, creditors and the debtor shall have the right to appeal — within a period of three days — to the Court against the decision of the Meeting adopted in violation of the requirements of this Law and other legal acts. The Court shall have the right to declare the decision of the Meeting invalid, where the rights of the applicant, prescribed by this Law or other legal acts, have been violated. Otherwise, the Court shall reject the application.
The judge shall examine the appeal within a period of one week. The judge shall have the right to leave the decision in force, where the participation of that creditor in the voting could not have affected the results of the voting, and the violations committed are not substantial.
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Article 37. |
Voting ballot paper |
1. Voting at the Meeting shall be held by ballot papers.
2. The ballots shall be draw up by the administrator.
3. The ballot paper shall contain the following information:
(a) the name (title) of the debtor and the bankruptcy case number;
(b) year, month, day, time and address of venue (in case of in person Meeting) of convening the Meeting;
(c) the contents of the issues put to vote, voting options for each issue put to vote — “for” and “against”;
(d) an instruction that the ballot must be signed by the creditor;
(e) clarification of the procedure for filling in the ballot paper;
(f) procedure and deadline for forwarding the ballot paper to the administrator.
4. The procedure for holding and organising voting during Meetings shall be determined by the rules of procedure of the Meeting.
(Article 37 edited by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 38. |
Board of Creditors |
1. The Board of Creditors (hereinafter referred to as “Board”) shall represent the interests of creditors and exercise supervision over the activities of the administrator as prescribed by this Law. The Board shall not be formed where the number of creditors with approved claims is less than 10. In such cases, as well as in cases the Board is not formed for other reasons, the powers of the Board shall be exercised by the Meeting.
2. The Board shall be formed in the first Meeting of Creditors. Five creditors with the largest unsecured claims shall be included in the Board, in compliance with the size of approved claims, irrespective of the fact of having the right to vote at the Meeting.
3. In case the number of creditors with unsecured claims and wishing to be included in the composition of the Board is less than five, creditors with the next largest unsecured claims shall be included in the composition of the Board.
4. The Board shall have the right to:
(a) request from the administrator information on the financial condition of the debtor and the bankruptcy proceedings;
(b) appeal against the actions of the administrator in cases provided for by law;
(c) exercise other powers provided for by this Law.
5. The member of the Board shall have only one vote during voting. Transferring the vote of the member of the Board to another person shall not be allowed.
6. The decision of the Board shall be deemed to be adopted, where more than half of the total number of members of the Board have voted in its favour. The procedure for considering issues and rendering decisions by the Board shall be determined by the rules of procedure adopted by the Board. Decisions of the Board shall be signed by the members of the Board, indicating their being “for” or “against” the given decision. Where the member of the Board, having voted against the given decision, refuses to sign, a note thereon shall be made in the decision. The authenticity of the notation shall be certified by the signatures of the other members of the Board. The member of the Board, having voted against the decision of the Board, may attach his or her opinion to the decision.
7. Sittings of the Board shall be presided over by the administrator, without the right to vote. The sitting shall be held in person — by the gathering of members of the Board in one place, or remotely — through the use of other means of electronic communication or through the electronic system. The members of the Board shall be duly notified of the sitting of the Board as prescribed by this Law, at least three days prior to the sitting.
8. The administrator, creditors and the debtor shall have the right to appeal — within a period of three days — to the judge conducting the case against the decision of the Board adopted in violation of the requirements of this Law and other legal acts. The Court shall have the right to declare the decision of the Board invalid, where the rights of the applicant, prescribed by this Law or other legal acts, have been violated. Otherwise, the Court shall reject the application.
The judge shall examine the appeal within a period of three days. The judge shall have the right to leave the decision in force, where the participation of that creditor in the voting could not have affected the results of the voting, and the violations committed are not substantial.
(Article 38 amended by HO-13-N of 22 December 2010, supplemented by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
CHAPTER 6
CLAIMS OF CREDITORS
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Article 39. |
Moratorium |
1. From the moment of accepting the bankruptcy application for proceedings:
(a) giving — by the debtor — monetary or other satisfaction to the creditors in accordance with the contractual or other liabilities thereof, performing any action in repayment of the debt without a decision of the Court shall be prohibited, except for liabilities relating to normal current activities of the debtor;
(b) alienation, lease, pledging or other type of encumbrance of the property of the debtor, as well as shares (stocks, equity shares and other securities prescribed by law) in a debtor organisation owned by the participant (participants) thereof shall be prohibited, except for the cases provided for by part 2 of Article 55 of this Law;
(c) all enforcement proceedings for levy in execution of property shall be suspended; collections through indisputable procedure prescribed by a writ of execution or other documents shall be prohibited;
(d) offset of any liability undertaken by the creditor against the debtor before submitting an application for declaring the debtor bankrupt with the claim thereof against the debtor shall be prohibited, except for the cases provided for by Article 40.1 of this Law.
2. From the day of entry into legal force of the judgment on declaring the debtor bankrupt:
(1) time limits for fulfilling liabilities of the debtor shall be deemed commenced;
(2) giving monetary or another satisfaction — by the debtor — to creditors under any contractual or other obligations thereof, without a decision of the Court, in another manner than provided for by the financial recovery plan, as well as obligations with respect to tax and other fees that arise as a result of normal activities in the bankruptcy proceedings shall be prohibited;
(3) calculation of interests against the payment liabilities, including with respect to taxes, duties and other fees, as well as accrual of any type of fines, interests and penalties for the failure to fulfil or improper fulfilment of payment of those liabilities of the debtor shall terminate;
(4) cases in proceedings of a civil, administrative or arbitration tribunal with the request for confiscation of amount from the debtor or transfer of property shall be dismissed or terminated, and claims of creditors against the debtor may be submitted within the scope of bankruptcy proceedings, within the time limits and as prescribed by this Law;
(5) any enforcement proceeding with regard to the debtor involving confiscation of property or any enforcement proceeding of non-proprietary nature, which affects the property included in the estate of the debtor declared bankrupt and the rights thereof, shall be terminated, except for other cases prescribed by this Law;
(6) liens and restrictions on the property of the debtor shall be removed.
3. Moratorium shall not extend to:
(a) levy execution of alimonies;
(b) remuneration of the temporary administrator, administrative and other expenses necessary for current activities of the debtor through interim distribution plans;
(c) the object of the secured right of the creditor having a secured right, where the Court has allowed the debtor — as prescribed by this Law — to realise it through extra-judicial procedure;
(d) giving monetary or other satisfaction — by persons having provided guarantee or suretyship in fulfilment of liabilities of the debtor in the bankruptcy process — with respect to that guarantee or suretyship or any action or process aimed at the fulfilment thereof. Moreover, the bankruptcy process of the debtor shall not have impact on fulfilment of liabilities undertaken by the person having provided guarantee or suretyship for fulfilment of liabilities in securing the liabilities of the debtor by the guarantee or suretyship;
(e) in the cases provided for by Article 40.1 of this Law
(f) liabilities undertaken by the debtor in the case prescribed by part 3.1 of Article 40 of this Law;
(g) process of concluding by the debtor the schedule for gradual redemption of his or her tax obligations, where the sole creditor in the bankruptcy proceeding is the tax authority;
(h) the claim for compensation of financial expenses incurred by the authorised body in regard to elimination of the recorded violations prescribed by Laws of the Republic of Armenia “On fire safety” and “On state regulation in regard to technical safety”.
4. From the moment of entry into legal force of the judgment on declaring a debtor that is a legal person or an individual entrepreneur bankrupt, the executive of the debtor of the individual entrepreneur shall continue submitting financial and other statements and bear the liability for the failure to submit or improper submission thereof prescribed by the legislation.
5. From the moment of suspension of activities of the debtor, the administrator shall — on behalf of the debtor — submit:
(a) information on liabilities with respect to taxes and/or fees additionally arisen during the bankruptcy proceedings, in the form prescribed by the tax authority, including the information submitted by the secured creditor (on the basis whereof tax liabilities of the debtor are calculated) and register them in the register of creditors, under the relevant queue;
(b) financial and other statements as prescribed by the legislation of the Republic of Armenia, in case of resumption of activities of the debtor.
6. Moratorium shall continue until the completion of the given bankruptcy case.
(Article 39 supplemented, amended by HO-13-N of 22 December 2010, HO-235-N of 23 June 2011, edited by HO-105-N of 17 June 2016, supplemented by HO-192-N of 27 October 2016, amended, edited by HO-298-N of 21 December 2017, edited, supplemented by HO-294-N of 12 December 2019, edited by HO-222-N of 26 May 2021, supplemented by HO-187-N of 24 May 2023, HO-22-N of 16 January 2024)
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Article 39.1. |
Application on realisation of the object of the secured right |
1. The creditor who has secured rights over the debtor, and there are conditions for extra-judicial exercise of those rights under a contract concluded between them as prescribed by law, may, within a period of one month after declaration of bankruptcy, file an application with the Court with the request to approve the size of the claim and to permit extra-judicial realisation of the object of the secured rights or realisation thereof provided for by this Law.
2. The application of the secured creditor and the attached documents shall be filed as prescribed by part 2 of Article 46 of this Law. In case the application on extra-judicial sale of the object of a secured right is rejected on the ground of point 1 or point 2 of part 5 of Article 39.2 of this Law, the application shall be accepted as a claim filed under Article 46 of this Law.
3. The person with regard whereto the debtor acts as a third party pledgor may also enjoy the right prescribed by this Article.
4. Where the application provided for by this Article is submitted upon expiry of the time limit for submission and missing the time limit is recognised as excusable, the Court shall consider the application as prescribed by Article 39.2 of this Law.
(Article 39.1 supplemented by HO-105-N of 17 June 2016, amended, supplemented by HO-294-N of 12 December 2019, supplemented by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 39.2. |
Procedure for examination of the application on realisation of the object of the secured right and approval of the size of secured claim |
1. The Court shall, within two working days upon receipt of the application of the secured creditor, forward the copy of the application to the debtor and administrator, who may express in writing a position on the application within five working days upon receipt of the copy of the application.
2. Where the debtor or administrator fails to express a position within a period of five working days or fail to object to the application with the position expressed, the Court shall, within a period of one week after expiry of the time limit for expressing a position, render a decision on approving the size of the claim of the secured creditor and on permitting realisation of the object of the secured rights.
3. Where the debtor or administrator objects to the application with a position expressed to the Court, the Court shall, within a two-week period upon receipt of the objection, convene a court session and properly notify the applicant, debtor and administrator. As a result of consideration of objections, the Court shall determine the lawfulness, amount, priority and security of the claim.
4. Where the objection of the debtor or administrator is conditioned by the need to use the object of the secured right in the financial recovery plan of the debtor, the financial recovery plan and the statement on providing the secured creditor with equivalent protection shall be attached to the objection.
5. The Court may reject the application of the secured creditor on extra-judicial sale of the object of the secured right, where:
(1) it becomes clear that the secured creditor does not have the right to realise property through extra-judicial procedure;
(2) the financial recovery plan of the debtor may not be implemented without use of the object of the secured right, provided that the secured creditor has been provided with equivalent protection, on which a contract has been concluded;
(3) the examination of the claim of the secured creditor is subject to suspension.
(4) the application was submitted upon expiry of the time limit prescribed by part 1 of Article 39.1, and a motion on recognising the missing of the time limit as excusable was not submitted, or the submitted motion was rejected.
6. The secured creditor shall have the right to apply again with an application on realising the object of the secured right, where the grounds for rejecting the realisation of the property through extra-judicial procedure have been eliminated. The application filed by the secured creditor again shall be considered and resolved as prescribed by this Article.
7. The application on levying execution on and realising by the secured creditor not entitled to realise property through extra-judicial procedure the object of the secured right through judicial procedure shall be filed and considered as prescribed by Articles 39.1 and 39.2 of this Law, where the legal regulations of these Articles are applicable for consideration of the given application, in observance of the requirements of the relevant legal regulations of the Civil Code of the Republic of Armenia. On the ground of this part, in case of levying execution on the object of the secured right by court judgment, realisation of the object of the secured right shall be carried out within the scope of the bankruptcy case, as prescribed by this Law.
(Article 39.2 supplemented by HO-105-N of 17 June 2016, amended by HO-294-N of 12 December 2019, amended, supplemented by HO-89-N of 3 March 2021, supplemented by HO-27-N of 16 January 2024)
(Law HO-89-N of 3 March 2021 has a transitional provision)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 39.3. |
Selling the object of secured right |
1. The secured creditor may sell through extra-judicial procedure the object of secured right, where there exists a court decision on approving the size of the claim of the secured creditor and authorising sale of the object of secured right.
2. The secured creditor entitled to sell through extra-judicial procedure the object of secured right shall sell the object of secured right owned by a third party in accordance with the procedure prescribed by the Civil Code of the Republic of Armenia, and may sell the object of secured right owned by the debtor once the debtor has been duly notified on confiscation. The secured creditor shall also forward the copies of notification on confiscation to the Court and the administrator.
3. The secured creditor shall, within a period of one week after selling the object of secured right, duly notify the administrator on the date and price at which the object of secured right has been sold, the size of redemption of secured liability, and, where available, the difference between the sale amount of the object of secured right and the secured claim, and if the liability has not been fully redeemed — on the outstanding liability.
4. Where the sale amount of the object of secured right is greater that the claim of secured creditor, the secured creditor shall, within a 10-day period following the sale of the object of secured right, be obliged to transfer the amount equal to the difference between the sale amount and the secured claim to the special bankruptcy account, and — to the third-party pledgor, where the object of secured right is owned by a third-party pledgor.
5. The claim on applying confiscation to the object of secured right through judicial procedure filed by the secured creditor who is not entitled to sell the property through extra-judicial procedure after rendering a decision by the Court on approval of the size of claim of secured creditor and authorising sale of the object of secured right as prescribed by Article 39.2 of this Law, shall be considered within the scope of a separate civil case.
(Article 39.3 supplemented by HO-294-N of 12 December 2019)
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Article 40. |
Permission for certain activities during moratorium |
1. Upon the request of an interested person, the Court shall render a decision on permitting the performance of certain activities during moratorium, where:
(a) there is a need to provide equivalent protection;
(b) the given property is not subject to sale (realisation)
2. Upon the request of creditor or debtor, the Court shall permit offset of cross obligations of the same type during moratorium. The peculiarities of offset of obligations arising from financial transactions and security agreements are prescribed by Article 40.1 of this Law.
3. Offset shall not be allowed, where:
(a) the claim against the debtor has been transferred to the creditor from another person within 90 days prior to filing the bankruptcy application, and where the debtor has been insolvent during such period;
(b) the creditor assumed liability towards the debtor within 90 days prior to filing the bankruptcy application, with the purpose of offsetting his claim towards the debtor;
(c) as a result of offsetting, the ranking and proportionality of granting the claim prescribed by law shall be distorted.
3.1. Before approval of the final list of claims of creditors the Court may, at the request of the administrator, creditor or debtor, allow the debtor to undertake new financial liabilities. After approval of the final list of claims of creditors the Court may allow the debtor to undertake new financial liabilities upon consent of the creditor (Meeting of Creditors).
4. On the day following receipt of the application on permitting the performance of certain activities during moratorium, the court shall, in case the creditor files an application, send the copy of the application to the debtor and administrator, and where the application has been filed by the debtor (for the purpose of offsetting cross obligations with the creditor) or the administrator, to the creditor (creditors) and to the administrator or to the creditor and debtor, respectively.
Where, in the course of seven days following receipt of the copy of the application, the debtor (creditor) does not object, in writing, to the application filed, within a period of three days following the expiry of the time limit for challenging the application, the judge shall, without convening a court session, render a decision on permitting the performance of certain activities during moratorium.
Where, in the course of seven days following receipt of the copy of the application, the debtor (creditor) files, in writing, an objection to the Court, the Court shall, within a period of two weeks following receipt of the objection, appoint a court session and properly notify the parties on the time and venue thereof.
As a result of considering the objections, the Court shall, on the same day, render a decision on permitting the performance of certain activities during moratorium or rejecting the application.
(Article 40 supplemented by HO-192-N of 27 October 2016, supplemented, amended by HO-294-N of 12 December 2019, amended by HO-89-N of 3 March 2021)
(Law HO-89-N of 3 March 2021 has a transitional provision)
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Article 40.1. |
Netting of liabilities arising from financial transactions and security agreements |
1. Within the meaning of this Law, netting shall be deemed to be:
(a) early performance or early termination of the liability for payment or supply by one or several financial transactions and security agreements under a netting agreement;
(b) the assessment and calculation of the value, market value, liquidation value or the value of substituting the liability emerged by virtue of demanding such early performance or early termination of the liability for each payment or supply provided for by point (a) of this part;
(c) conversion to one currency of the values calculated or assessed under point (b) of this part;
(d) the determination of the net balance sheet of the values calculated under point (b) of this part and converted to the same currency under point (c) via offset or other means.
2. Within the meaning of this Law, netting agreement shall be the agreement of the parties which:
(a) provides for a netting right of present or future rights or obligations to pay or supply stemming from one or several financial transactions and security agreements concluded within the scope of the main agreement;
(b) provides for a netting right between two or more main agreements;
(c) the security agreement related to the agreements provided for by points (a) and (b) of this part or constituting part thereof.
3. Financial transaction for the purpose of netting shall be deemed to be, within the scope of this Law, the transactions provided for by Article 252.1 of the Civil Code of the Republic of Armenia.
4. Security agreements for the purpose of netting shall be deemed to be, within the scope of this Law, the following related to the agreements provided for by part 3 of this Article:
(a) the following secured rights:
(1) the secured right over securities and monetary funds,
(2) the suretyship and guarantee,
(3) the margin and other similar agreement,
(4) the instruments of attraction;
(b) the transactions, the obligatory constituent part whereof is the transfer of the right of ownership over securities or monetary funds as a security measure, including repo transactions, transactions of borrowing securities, transactions related to purchasing and selling back securities.
5. Within the scope of this Law, netting shall be allowed within the scope of the netting agreement, irrespective of the restrictions provided for by Articles 15.5 and 39 of this Law.
6. The administrator shall have the right to unilaterally request netting, where the party to the netting agreement has failed to exercise, within 45 days from the moment of freezing of the satisfaction of claims of creditors, the rights given to the party under the netting agreement, unless other time limit is provided for under the agreement concluded between the parties.
7. The rules of this Article shall extend to the agreements providing for netting and security agreements exclusively with respect to the part related to financial transactions.
8. The administrator’s rights— provided for by points (a), (b), (c) and (d) of part 1, as well as part 2 of Article 54 of this Law — shall not apply to the amounts kept from the debtor or transferred to the debtor or to the security object within the scope of the netting agreement, as well as to financial transactions and security agreements.
(Article 40.1 supplemented by HO-192-N of 27 October 2016)
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Article 41. |
Equivalent protection |
1. Equivalent protection is the permission for the performance of certain activities during action of a financial recovery plan or during moratorium that is aimed at maintaining security of the claim of a secured creditor as a result of devaluation of the property pledged in exchange of the claim, in cases provided for by this Law.
Equivalent protection shall be granted in cases when, within the scope of a financial recovery plan or resumption of activities of the debtor, there is a need to make use of the collateral of the secured creditor.
2. Equivalent protection shall be effected (granted) in any form that will ensure the protection of the interests of a secured creditor. In particular, it may be effected as follows:
(a) cash payments made by the administrator, in the amount of devaluation of the property;
(b) increase of collateral of the debtor or replacement thereof with more valuable property;
(c) total satisfaction of secured claims of creditor to the whole extent of the possible realisation price of the property (without payment of maintenance expenses and other administrative expenses).
3. The Court shall, on the day following receipt of the application on provision of equivalent protection, forward the copy of the application to the debtor.
Where the debtor does not challenge in writing the filed request within seven days upon receipt of the copy thereof, the judge shall, on the eighth day, render a decision on provision of equivalent protection without convening a court session.
Where, in the course of seven days following receipt of the copy of the application, the debtor files, in writing, an objection with the Court, the judge shall, on the day following receipt of the objection, convene a court session and properly notify the parties on the time and venue thereof.
As a result of considering the objections, the Court shall, on the same day, render a decision on approving or rejecting provision of equivalent protection.
5. Equivalent protection may be provided only upon covering administrative expenses in full, except for the cases provided for by point (c) of part 2 of this Article.
6. Equivalent protection for making use of the object of the secured right in the financial recovery plan shall be provided prior to consideration of the issue on approving the financial recovery plan.
(Article 41 supplemented by HO-235-N of 23 June 2011, supplemented, amended by HO-105-N of 17 June 2016)
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Article 42. |
Registration and calculation of claims |
The administrator shall, in a register maintained thereby, register the amounts, priorities of claims filed against the debtor and the modifications of the claims. The requisites and the procedure for maintaining the register of claims filed by creditors shall be defined by a secondary regulatory legal act of the Minister of Justice of the Republic of Armenia.
(Article 42 amended by HO-294-N of 12 December 2019, edited by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 43. |
Secured claims and the satisfaction thereof |
(title edited by HO-235-N of 23 June 2011)
1. Claims burdened with secured right shall be deemed to be secured. Secured creditors shall be deemed to be persons with a secured right, with respect to those claims.
2. Upon a court decision on satisfying the application on realisation of the object of the secured right, the secured creditor shall not be included in the list of creditors under a bankruptcy case, and his or her secured claims shall be satisfied exclusively at the expense of realisation of the object of the secured right for that liability. In this case, the secured creditor, irrespective of the amount of satisfaction of secured claims, may not file any claim over other property of the debtor with respect to the given liability in the future. The claim of the secured creditor granted at the expense of extra-judicial sale of the object of the secured right shall not be calculated in the size of the granted claim serving as a ground for calculation of remuneration of the administrator.
3. The claims of a creditor secured by guarantee or suretyship, including default penalties, fines and payable interests — set under the agreement for failure of fulfilment or improper fulfilment of the secured liabilities — may be satisfied at the expense of the funds of the person having granted guarantee or suretyship. Where the funds of a person having granted guarantee or suretyship are insufficient or a claim is not filed against a person having granted guarantee or suretyship, the secured creditor shall, as prescribed by Article 46 of this Law, be included in the list of creditors under a bankruptcy case and shall receive satisfaction of his or her claims as prescribed by part 7 of this Article. Moreover, the amounts of default penalties, fines and payable interest rates calculated in the bankruptcy process of the debtor, prescribed by the agreement, for failure to fulfil or improper fulfilment of the liabilities secured by guarantee or suretyship, may not be requested from the debtor.
4. Where a secured creditor is included in the list of creditors under a bankruptcy case, he or she shall receive satisfaction of the secured claims as prescribed by parts 5, 6, 7 and 9 of this Article.
5. The secured creditor included in the list of creditors may, by way of priority, request satisfaction of the secured liability at the expense of funds received from sale of the object of the secured right.
6. The secured creditor included in the list of creditors may not participate in the distribution of funds received from realisation of the object of the unsecured right for his or her corresponding liability pertaining to the debtor prior to realisation of the object of the secured right, as long as the current value of the object of the secured right (assessed value or starting price at the auctions in progress) is more than the claim of the secured creditor or is equal thereto, except for cases of providing equivalent protection upon a court decision. Where the value of the object of the secured right (starting price) decreases from the size of the secured claim during realisation through public auction or as a result of loss (elimination, illegal taking) or damage of property, the secured creditor shall obtain the right to participate in the distribution of funds obtained from the sale of the object of the unsecured right for the relevant obligation belonging to the debtor, in the amount of the difference between the size of the secured claim and the value of the property.
7. Where the funds received from realisation of the object of the secured right are not sufficient for completely redeeming the claims of the secured creditor included in the list of creditors, as well as the unsatisfied (including unsatisfied as a result of not demanding fulfilment of liability from the person having granted a guarantee or suretyship) part of the secured claims by way of guarantee (suretyship) (except for the amounts of the default penalties, fines and payable interests calculated during the bankruptcy process of the debtor and set under the agreement for failure to fulfil or improper fulfilment of those liabilities) shall be deemed to be unsecured claim, and the creditor shall be deemed to be an unsecured creditor, in the amount of the unsecured claim.
8. Where the funds received from realisation of the object of the secured right exceed the amount of the relevant secured claim, moratorium shall apply to those funds with respect to the exceeding amount, and those funds shall be distributed in the sequence defined by this Law, and where the object of the secured right is the ownership of another person, it shall be transferred to that person.
9. Where the starting price of the object of the secured right is equal to or less than the amount of the claim of the secured creditor, the creditor included in the list of creditors shall, upon a court decision, be entitled to obtain title to the object of the secured right in favour of him or her or of the person indicated thereby in the amount of his or her claim or part thereof, by reimbursing the maintenance and transfer costs of that object of the secured right, as well as remuneration of the administrator, in the amount of 3% of the starting price of the object of the secured right, but not more than in the amount of ten thousand-fold of the minimum salary. In such case, the size of the claim of the given creditor shall not be decreased by the amount paid for the maintenance and transfer costs of the object of the secured right and remuneration of the administrator.
10. Where the claim of the secured creditor included in the list of creditors is secured by the property of a third party, this party shall be entitled to terminate the securing of the claim with his or her property, by transferring the following as a deposit to the special bankruptcy account:
(1) expenses related to the secured claim, calculated maintenance and realisation costs of the property in case the estimated price or starting price for future realisation of the property exceeds the amount of the value of the principal secured liability;
(2) in case the estimated price or starting price for future realisation of the property is less than the value of the principal secured liability, an amount equal to the starting price offered at the latest invalidated auction.
10.1. In case the creditor and the third-party pledgor wish to exercise the rights prescribed by parts 9 and 10 of this Article respectively, priority shall be given to the third-party pledgor.
10.2. Where the debtor and the third-party pledgor have been declared bankrupt, the property specified in part 10 of this Article shall be sold during the bankruptcy proceedings of the debtor, and where the property is encumbered with claims secured under bankruptcy proceedings of several debtors, it shall be sold in the bankruptcy proceeding, where the right secured by that property is primary. The difference of the size of the claim and the sale amount of the property shall be transferred to the special account of the bankruptcy proceedings of the third party, once selling the property in any bankruptcy proceeding and granting the secured claims.
10.3. Where the debtor acts as a third-party pledgor, the administrator shall, within a period of five days from the date of becoming informed thereon, notify the pledgee under that pledge on outstanding obligations of the debtor. In case the pledgee fails to exercise the right of sale of the object of pledge and the object of pledge is sold in the bankruptcy proceeding, the object of pledge is deemed to be encumbered by liabilities of the pledgee on the same conditions as those existing before the sale of that object.
10.4. The third-party pledgor, surety or guarantor shall have all the rights and obligations prescribed for the debtor with respect to the relevant claim.
11. Where a third party pledgor, guarantor or person granting guarantee obtains a claim over the debtor as prescribed by the legislation, the claim shall be subject to satisfaction as a claim provided for by sub-point (g) of part 1 of Article 82 of this Law.
(Article 43 edited by HO-235-N of 23 June 2011, HO-105-N of 17 June 2016, supplemented, edited, amended by HO-294-N of 12 December 2019, amended by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 44. |
Unsecured claims |
All claims unsecured by pledge or guarantee (suretyship), as well as unencumbered with a secured right or the unsecured parts of secured claims shall be deemed to be unsecured claims, including the claims having emerged upon entry into legal force of the judgment on declaring the debtor bankrupt and the tax liabilities arising from realisation of the property of the debtor, the priority of which is prescribed by part 1 of Article 82 of this Law.
(Article 44 supplemented by HO-235-N of 23 June 2011, amended by HO-298-N of 21 December 2017, supplemented by HO-22-N of 16 January 2024)
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Article 45. |
Liabilities not due |
1. The contracts concluded by the debtor and not due which have not been fulfilled completely by both parties, including the contracts significantly affecting the debtor’s property and assets that the debtor has been compelled to conclude under cumbersome circumstances, in ultimately disadvantageous conditions for him or her, to the benefit of the other party, may, by court decision, be rescinded within two months upon entry into legal force of the court judgment on declaring the debtor bankrupt, upon motion of the administrator. In case these contracts are not rescinded, they shall be in effect before the activities of the debtor are suspended, after which they shall be deemed to be rescinded.
2. In case of rescission of the contract, the party satisfied until the moment of rescission shall be obliged to compensate for the unpaid part at the price specified by the contract.
(Article 45 supplemented by HO-294-N of 12 December 2019, HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 46. |
Approval of claims |
1. Creditors shall file their claims with the Court within a one-month period after the announcement of bankruptcy, except for cases provided for by this Law.
1.1. In case the motion prescribed by part 8 of Article 11 of this Law has been submitted and a claim has been filed by the creditor under general procedure prescribed by this Article, the Court shall only consider that claim.
2. The following shall be stated in the claim of the creditor:
(a) for the creditor filing the claim:
- the name and registered office of a legal person;
- the name and place of residence of a natural person;
(b) the liability wherefrom the claim arises, as well as the satisfaction period;
(c) the size of the claim by stating separately the amounts of the principal debt, losses, default penalty (fine, penalty) accompanied by corresponding calculations;
(d) circumstances substantiating the claim.
Substantiating documents shall be submitted attached to the claim. After the time limit for filing the claim has expired, documents substantiating the claim may be submitted, where the person who has submitted them substantiates the impossibility of submitting such documents within the prescribed time limit for reasons beyond his or her control.
The claim and the documents attached thereto shall be submitted in three copies.
2.1. In case of failure to comply with the requirements prescribed by part 2 of this Article, the filed claim shall not be considered, and the creditor shall be informed of that not later than the following day. To eliminate the shortcomings, the Court shall prescribe a time limit of up to three days. The claim shall be deemed to be filed within the time limit, where the shortcomings are eliminated and the claim has been filed with the Court again within the time limit prescribed by the Court.
3. If the claim is filed in due procedure prescribed it shall be registered with the Court.
4. The Court shall forward the copies of the claim and the documents attached thereto to the administrator not later than within one day after registration of the claim, for the purpose of delivering a copy thereof to the debtor.
5. The administrator shall include all the claims — presented within the time limit provided for by part 1 or 2.1 of this Article — in the initial list of claims of creditors, in accordance with the priority order of satisfaction of claims prescribed by Article 82 of this Law.
6. The administrator shall, within a three-day period after the time limit prescribed for filing claims, and where a time limit is prescribed by the Court for eliminating the shortcomings — within a three-day period after that time limit, submit the initial list of claims to the Court, the debtor, the five creditors with larger claims and shall publish it in the printed media publishing information on state registration of legal persons. Where, within seven days following the publication, the administrator, the debtor and the creditors do not file written objections to the Court against the initial list, the judge shall, within a three-day time limit, render a decision on approving the list of claims (final list), without convening a court session.
7. (part repealed by HO-294-N of 12 December 2019)
8. Where, within seven days following the publication in the printed media publishing information on state registration of legal persons, the administrator, debtor and creditors file a written objection regarding the priority of the initial list of claims or the claim of any creditor, the Court shall, within 15 days following receipt of the objection, determine the lawfulness, size, priority, security of the claim and render a decision on approving the final list of claims.
The decision on approving the final list of claims may be appealed.
9. The Court shall deliver the new claims and amendments to claims filed with the Court after the time limit prescribed for filing of claims to the administrator. The administrator shall, within a three-day time limit following receipt of the claim or the amendment to the claim, forward the copy thereof to the debtor, creditors or shall publish brief information thereon in the printed media publishing information on state registration of legal persons.
Where, within seven days after receiving the copy of the amendment to the claim or after the amendment to the claim is published in the printed media publishing information on state registration of legal persons, the administrator, debtor and creditors do not file with the Court a written objection to the claim or the amendment to the claim, the administrator shall register the claim or the amendment to the claim in the register of claims, in accordance with Article 85 of this Law, except for the claims having arisen after the entry into legal force of the judgment on declaring the debtor as bankrupt, the priority whereof shall be prescribed by part 1 of Article 82 of this Law.
10. Where the claim or the amendment to the claim is objected, the judge shall determine the size, lawfulness, priority and security of the claim, by making, upon necessity, an amendment to the rendered judicial act on the claim.
As a result of considering the objections, the Court shall render a decision, which may be appealed.
11. If the objections provided for by this Article are filed after expiry of the time limit for filing thereof, and if the omission of the time limit is considered justified, the objections shall be considered by the Court. After considering the objections, the Court shall determine the lawfulness, size, priority of the claim, making upon necessity, amendments to the judicial act rendered on the claim.
(Article 46 edited by HO-105-N of 17 June 2016, supplemented, edited, amended by HO-294-N of 12 December 2019, supplemented, amended by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
CHAPTER 7
PROPERTY OF THE DEBTOR
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Article 47. |
Property of the debtor and its disposal |
1. Any property, including object of intellectual property or other proprietary rights pertaining to the debtor, as well as objects of the secured right owned by the third party, shall be included in the estate of the debtor. The object of the secured right (including owned by the third party), regarding which the Court has, in accordance with the procedure defined by Article 39.2 of this Law, rendered a decision on approving the size of the claim of the secured creditor and authorising sale of the object of the secured right, shall not be included in the estate of the debtor, except for the funds received from the sale thereof that are included in the estate of the debtor in the case provided for by part 8 of Article 43 of this Law.
2. Starting from the moment of declaring the debtor bankrupt until the adoption of a decision on liquidation thereof, the executive of the debtor shall act upon the consent and under control of the administrator. The executive of the debtor shall be prohibited to dispose the property of the debtor or carry out any operation that creates liability in rem for the debtor without the permission of the administrator.
3. After rendering a decision on liquidation of the debtor, the administrator shall dispose the property belonging to the debtor in the manner prescribed by this Law. After liquidation, the executive of the debtor shall be deprived of the rights to disposal and management of the property.
4. Any transaction entered into by the debtor in breach of the requirements referred to in parts 1 and 2 of this Article shall be null and void.
(Article 47 amended by HO-235-N of 23 June 2011, HO-105-N of 17 June 2016, edited by HO-294-N of 12 December 2019)
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Article 48. |
Obligation of the debtor to cooperate |
1. The governing bodies of the debtor shall be obliged to provide the administrator with all the necessary documents and reliable information about the activities and funds of the debtor, including alienation of the property of the debtor or decrease, in another manner, of the assets of the debtor within three years prior to the declaration of the debtor as bankrupt.
2. The executive of the debtor, as well as persons responsible for finances shall bear liability for co-operation provided for by this Article till closure of the bankruptcy case. In case of failure to fulfil the specified requirement, the relevant persons shall bear liability as prescribed by the legislation.
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Article 49. |
Utility payments of the debtor and validity of contracts for provision of vital goods and services to the debtor |
(title edited by HO-294-N of 12 December 2019)
1. The organisations providing utility services (electricity, natural gas, water, phone connection, etc.) to the debtor may not refuse, reject, terminate the provision of their services for the reason that the Court has declared the debtor bankrupt, where the debtor, after being declared bankrupt, makes the current payments for the specified utility services in a timely manner.
2. The existence of a debt generated before the debtor was declared bankrupt may not serve as a ground for rescission of the contract on supply of utility services or for termination of services.
3. Upon the request of the administrator and by a court decision, the contract for provision of vital goods and services for continuity of the activities of the debtor shall not, as provided for by part 4 of this Article, be included in the restrictions provided for by Articles 15.5 and 39 of this Law, and the payments arising therefrom shall be made by the administrator as administrative expenses.
4. The administrator shall include in the analysis of the financial condition of the debtor information on the contracts complying with the requirements set under part 3 of this Article, substantiating the fact that those contracts are of vital importance for the debtor, and shall submit it along with the copies of the contracts to the Court for approval. The Court may, upon its decision, approve the compliance of each contract with the requirements of part 3 of this Article. The decision of the Court shall serve as a ground for extension of validity of contracts provided for by part 3 of this Article.
(Article 49 edited, supplemented by HO-294-N of 12 December 2019)
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Article 50. |
Contracts of the debtor |
1. Contractual obligations of alienation of property may not be fulfilled from the moment the judgment on declaring the debtor bankrupt enters into legal force.
In exceptional cases, upon the motion of the administrator, fulfilment of the obligation of the debtor of alienation of property may be authorised by a court decision based on the peculiarities of the activities, property, transactions of the debtor and other circumstances.
The court decision on alienation of property may be appealed against through appeal procedure.
2. Where the person having purchased the property of the debtor has obtained the right of ownership over the property prior to complete settlement of the amount of sale, the transaction shall be deemed to be complete in case of fulfilment of his or her obligation in full within a ten-day period after receiving the request of the administrator.
2.1. Where the debtor has acted as developer of an multi-apartment or subdivided building, and the completed (with state registration on the ground of a concluding act) building belonging to the debtor by right of ownership is burdened with the rights of other persons based on contracts on the right to purchase immovable property from the building under construction, in case the person entitled to purchase immovable property from the building under construction pays the amount of the final settlement of the contractual price to the bankruptcy account within a one-month period after receiving the claim of the administrator, the administrator shall, in the name of the developer, conclude a transfer act in accordance with the requirements set by law and transfer the right of ownership over the separated unit to the person.
3. The employment contracts of the debtor shall be rescinded as prescribed by the labour legislation of the Republic of Armenia.
4. The party to the contract may require compensation for the actual damage incurred as a result of early rescission of the contract by filing his or her claim as prescribed by this Law.
5. Where regular payments (by the debtor) are provided for by the contract, the administrator may make them only after the list of claims and the ranking of claims defined by this Law are approved by the Court.
6. The restrictions set under this Article shall not apply to the transactions satisfied by the Court and envisaged for realisation under extra-judicial procedure or to execution of that transaction. These transactions shall be concluded and executed under the general procedure and conditions set under the Civil Code of the Republic of Armenia.
(Article 50 amended by HO-48-N of 5 February 2009, supplemented by HO-235-N of 23 June 2011, HO-90-N of 19 June 2015, edited by HO-105-N of 17 June 2016, amended by HO-294-N of 12 December 2019)
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Article 51. |
Property in transit |
1. When, at the moment of registering a claim with respect to the property sold to the debtor by the creditor, the debtor has not obtained the right of ownership, the creditor may recover or not deliver it to the debtor. In such case, all the expenses related to the recovery or non-delivery shall be incurred by the creditor, by also reimbursing the payments made by the debtor.
2. Where the creditor delivers the property to the debtor or does not file a claim to recover the property before registering the claim, the cash claim of the creditor may be included in the list of general claims.
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Article 52. |
Realisation of property belonging to third parties |
1. Where the debtor realises the property belonging to the third party or he or she has the property under other contractual grounds (hereinafter referred to as “property belonging to third parties”), the third party shall have the right to require his or her property from the debtor after the judgment on declaring the debtor bankrupt enters into legal force, unless otherwise provided for by the contract.
2. Where the return of property or part thereof belonging to third parties is not possible after the debtor is declared bankrupt, including for the reason of the property having been realised, or if, as a result of return, its quality characteristics may sharply deteriorate (perishable goods, etc.), upon the request of the property owner, the claim thereof shall be included in the registry of claims at contract value of the property, and in case of impossibility to determine the contract value — at its market value.
3. (part repealed by HO-235-N of 23 June 2011)
(Article 52 amended by HO-235-N of 23 June 2011)
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Article 53. |
Delivery of professional services |
1. Where, after the debtor is declared bankrupt, the other party to the contract agrees to accept the contractual obligations of the debtor to deliver services, the debtor may, prior to liquidation of the debtor, provide those services under the supervision of the administrator.
2. Where the administrator does not find fulfilment of the contractual obligations of the debtor provided for by part 1 of this Article appropriate, the requirements arising from those contracts shall be satisfied as prescribed by this Law.
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Article 54. |
Transfers to third parties and alienation of property |
1. The administrator may, within six months after approval of the final list of creditors , apply to the Court to retrieve the following under court procedure:
(a) non-refundable (including non-cash) transfers of the debtor to persons affiliated to the debtor that were made during the five years before the debtor was declared bankrupt;
(b) non-refundable (including non-cash) transfers of the debtor to any third parties that were made during the three years before the bankruptcy application was filed;
(c) any transfer made by the debtor to the creditor or in favour of the latter in exchange of the obligation assumed in the past (including non-cash transfer) within 90 days before the bankruptcy application was filed (within one year, where the transfer has been made to the affiliated person), at the moment of which the debtor was insolvent, and the creditor has received significantly more than he or she would receive in the bankruptcy proceedings, in case of liquidation of the debtor;
(d) the damage incurred by the debtor as a result of transactions, transfers made and alienation of property within three years before the debtor was declared bankrupt, which is a result of the difference between the value of realisation of the property, service, work and the market value thereof at the moment of making the transaction, except when the transaction has been concluded on the ground of public auction;
(e) the security object levied in accordance with the net agreement and/or security contracts between the debtor and creditor, where, at the same time, the following conditions have been met:
(1) the net agreement and/or security contract was concluded within 90 days before the bankruptcy application was filed with the Court,
(2) at the moment of conclusion, the bankruptcy or the possibility of bankruptcy was predictable for the debtor,
(3) concluding such a net agreement and/or security contract was not in the interests of the debtor and exclusively pursued the goal of bringing the assets out of the bankruptcy process.
1.1. The administrator shall apply to Court with the claim prescribed by part 1 of this Article, where the Meeting of Creditors has not rendered a decision on refraining from applying to Court with a specific claim. Such a decision may be rendered, where due to applying to Court with a claim prescribed by part 1 of this Article the expenses to be made by the administrator may reasonably exceed the cost (price) of the returned transfer.
2. In cases provided for by point (c) of part 1 of this Article, the transferred property or the value thereof may not be claimed back, where:
(a) the creditor transfers to the debtor other property of equivalent value, simultaneously with the transfer;
(b) after fulfilment of the liability previously assumed by the debtor with respect to the creditor, the creditor has transferred to the debtor new property which is not a collateral;
(c) in the course of carrying out its regular activities, the debtor has fulfilled the liability assumed with regard to the creditor during such period of time, if it has been fulfilled in compliance with customary business practices;
(d) a liability not exceeding AMD 200 000 assumed with regard to the creditor has been fulfilled through a transfer;
(e) contracts on the pledged property of the debtor, not resulting in the violation of the rights of unsecured creditors (as a result whereof the value of unsecured liabilities of the debtor will not exceed the value of property not encumbered by a pledge);
(f) liabilities in regard to taxes, duties and other mandatory payments, administrative fines have been discharged through transfer.
3. In cases provided for by this Article, the transferred property or the value thereof may not be claimed back, where they have been transferred as a result of execution of transactions related to that property for satisfying the secured claims of the bank or credit organisation.
(Article 54 supplemented by HO-235-N of 23 June 2011, edited by HO-105-N of 17 June 2016, supplemented by HO-192-N of 27 October 2016, edited, supplemented by HO-294-N of 12 December 2019)
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Article 54.1. |
Declaration on the property of the debtor |
1. The debtor shall, within 20 days from entry into legal force of the judgment on declaring the debtor bankrupt, be obliged to submit a declaration to the administrator on the property belonging to him or her by the right of ownership and his or her proprietary rights, including on the right to claim, composition, quantity and location thereof. The debtor shall also be obliged to provide information in the declaration on his or her receivables, property and proprietary rights to be registered or recorded, yet not registered (not recorded) under the name of the debtor on the basis of a judicial act, certificate of inheritance or other document confirming the right, as well as on transactions provided for by part 1 of Article 54 of this Law.
2. Concealment or distortion in the declaration of data on composition, quantity and location of property and proprietary rights or malicious evasion to submit a declaration shall incur the liability prescribed by Law.
3. The form of and the procedure for submitting the declaration on the composition, quantity and location of property and proprietary rights shall be defined by the secondary regulatory legal act of the Minister of Justice of the Republic of Armenia.
(Article 54.1 supplemented by HO-294-N of 12 December 2019)
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Article 55. |
Maintenance and realisation of property belonging to the debtor |
1. The administrator shall take all the necessary measures to maintain the property belonging to the debtor.
2. Before the Court adopts a decision on the financial recovery plan of the debtor or liquidation of the debtor, the administrator - upon a court decision and as prescribed by the legislation of the Republic of Armenia - may sell through direct transaction only the following:
(a) perishable goods belonging to the debtor;
(b) property belonging to the debtor, requiring significant maintenance expenses. Significant maintenance expenses shall be considered those exceeding 5% a month of the value of that property.
The executive of the debtor may, before suspension of the activities of the latter, upon recommendation of the administrator and upon a court decision, continue realisation of the property, provision of services or performance of tasks which is the result of activities of the debtor, where termination of such operations will lead to distortion or termination of the activities of the debtor or may incur other unfavourable consequences for the debtor. The restrictions for alienation of property provided for by this Law shall not apply to such cases of realisation.
3. Funds transferred to the special bankruptcy account of the debtor may be used for maintenance of the property of the debtor. Where the funds transferred to the special bankruptcy account of the debtor are not sufficient for maintenance of the property of the debtor, the administrator, upon permission of the Court, may sell through direct transaction other property belonging to the debtor. The value of the property to be sold for this purpose may not exceed 10% of the value of the whole property belonging to the debtor.
4. Funds generated from transactions provided for by this Article shall be transferred to the special bankruptcy account of the debtor.
5. Where, in the cases provided for by part 2 of this Article, the collateral is sold, for the purpose of maintaining the property of the debtor, not more than 5% of the funds generated from the sale of that property transferred to the special bankruptcy account of the debtor may be used, and upon consent of the pledgor — more than 5%.
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Article 56. |
Inventory of debtor’s estate |
1. The administrator shall, within 30 days following the coming into force of judgment on declaring the debtor bankrupt, conduct an inventory of the debtor’s estates. In case of large sizes of estates or other valid reasons, the Court may extend the term of inventory-taking by a reasonable period of time. Upon the request of the administrator, the debtor (the representative of the debtor) shall be obliged to be present at and assist in the inventory.
The administrator shall notify about the inventory of the debtor’s estates to the Board, and, in case it is not formed, to the five known creditors with larger claims. These persons can be present at the inventory works, but their failure to be present shall not be an impediment for carrying out the inventory.
2. The inventory must encompass all of the estates belonging to the debtor, including the unpaid works performed for and services provided to third parties, as well as the items possessed by the debtor. The latter may not be alienated until the issue of the ownership right thereof is clarified. The book value of the assets (if known) at the moment of the inventory shall be indicated in the inventory documentation.
3. The administrator shall notify about the time and place of inventory of the debtor’s estates to the five known creditors with largest claims, except for the creditors upon the application of which the Court has, in accordance with the procedure prescribed by Article 39.2 of this Law, adopted a decision on approving the size of the claim of the secured creditor and authorising sale of the object of the secured right. The notified creditors may participate in process of inventory-taking; however, their failure to participate shall not impede making the inventory.
4. When taking inventory of the debtor’s property, the debtor shall be obliged to inform the administrator in writing on the types of property, which constitute shared or joint ownership, indicating the data of co-owners (name, surname (name), place of residence (registered office). The debtor shall be obliged to submit also documents certifying the right of ownership of co-owners.
5. For the purpose of carrying out inventory the administrator shall have the right to access the apartment or the premises of other real estate belonging to the debtor upon the debtor’s consent, and in case of absence of such a consent — by a court decision. The administrator may access the apartment or other real estate belonging to other persons upon the consent of the owner (temporary holder) of that apartment or other real estate, and in case of absence of such a consent — by a court decision; the writ of execution drawn up upon such decision shall be promptly forwarded for compulsory enforcement.
6. In case no information is available on the location of the debtor’s estate, the administrator may, upon necessity, file an inquiry to the State Register of Real Estate, body carrying out state registration of legal persons, tax and customs authorities, relevant police units, the Civil Status Acts Registration Agency and the Social Security Service. State bodies shall be obliged to reply to inquiries of the administrator within a period of seven days, unless other time limit for replying to inquiries is set by law or other regulatory legal acts.
7. Inventory results shall be summarised in the inventory report which shall be signed by the administrator and other persons having participated in the inventory process. The signature of the debtor (debtor’s representative) indicates that he or she has been present in the inventory process and guarantees that the whole property belonging to the debtor has undergone inventory. Where the debtor (debtor’s representative) disagrees with the inventory results, he or she shall sign the inventory report, attaching his or her written objection thereto. In case of avoiding signing the inventory report, the administrator shall make a note thereon in the inventory report.
8. Where a property belonging to the debtor has been detected after drawing up the inventory report, the administrator shall make relevant amendments to the inventory report.
(Article 56 supplemented by HO-13-N of 22 December 2010, edited by HO-294-N of 12 December 2019)
(Article as amended by Law HO-192-N of 11 April 2024 shall enter into force from 1 January 2026 and shall be in effect in accordance with the decision of the Government provided for by part 4 of Article 23 of the Law “On enforcement proceedings”, from the moment of introducing the system ensuring electronic transfer — by the court — of the data required for instituting enforcement proceedings to the Compulsory Enforcement Service and the system for the court, the Constitutional Court, the Supreme Judicial Council (the staffs thereof) for electronic submission of applications on compulsory enforcement)
(Law HO-192-N of 11 April 2024 has a transitional provision)
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Article 57. |
The valuation of debtor’s estate |
The valuation of debtor’s estate shall be carried out by the administrator. The administrator shall, at the expense of the funds of the debtor, have the right to call an independent valuer in order to value the debtor’s estate, informing the Board thereon in advance, or five known creditors with larger claims if the Board has not been formed.
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Article 58. |
Analysis of the financial condition of the debtor |
1. Within 35 days after declaring the debtor bankrupt, the administrator shall submit the analysis of the financial condition of the debtor to the Court. In case of diverse and large-scale activities of the debtor or other valid reasons, the Court may extend the term for submission of the analysis of the financial condition for a reasonable period of time.
2. The analysis of the financial condition of the debtor shall at least contain:
(1) information on:
(a) bankruptcy reasons;
(b) sufficiency of a debtor’s funds for the compensation of court expenses and for the remuneration of the administrator;
(c) possibilities of restoring the solvency of the debtor;
(d) possibility to collect receivables of the debtor;
(e) contracts provided for by part 3 of Article 49 of this Law;
(f) transactions provided for by Article 54 of this Law;
(g) existence of elements of fraudulent or intentional bankruptcy, as well as the possibility of terminating bankruptcy proceedings with financial recovery.
3. In case of detecting elements of fraudulent or intentional bankruptcy, the administrator shall be obliged to immediately file a report to competent bodies.
4. The form of analysis of the financial condition of the debtor shall be prescribed by a secondary regulatory legal act of the Minister of Justice of the Republic of Armenia.
5. Each creditor shall have the right to get familiar with the financial condition of the debtor any time during the bankruptcy proceedings.
(Article 58 edited by HO-294-N of 12 December 2019, amended by HO-225-N of 9 June 2022)
CHAPTER 8
FINANCIAL RECOVERY PLAN OF THE DEBTOR
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Article 59. |
Financial recovery plan |
1. A financial recovery plan shall be deemed to be a complex of measures not proscribed by law and applied to the debtor for the purpose of restoring the solvency thereof, as a result of which the debtor will not be liquidated or no judgment will be rendered on closure of the bankruptcy case with respect to a natural person by releasing him or her from performing obligations.
2. The time limit of the financial recovery plan may not exceed 36 months, unless its period of operation has been extended as prescribed by this Law.
3. The following measures may be carried out within the framework of a financial recovery plan:
(a) sale of the whole or part of the debtor’s estate;
(b) transfer of the debtor’s estate to creditors through offset;
(c) pledging of the debtor’s estate;
(d) termination of unprofitable activities and change of sphere of entrepreneurial activity;
(e) amendment to or termination of unprofitable transactions;
(f) debt restructuring (extending the terms for debt repayment, rescheduling, releasing from liabilities);
(g) debt refunding through securities;
(h) levy execution on accounts receivable;
(i) receiving a new loan;
(j) undertaking new investments;
(k) reorganisation of the debtor;
(l) issuing new shares or buy-back;
(l.1) alienation, lease, pledging or other type of encumbrance of the shares (stocks, equity shares and other securities prescribed by laws) of the participant (participants) of the debtor organisation owned in a debtor organisation;
(m) other measures not proscribed by law.
4. During examination by the Court of the bankruptcy case of an investment fund, only the liquidation proceedings shall be implemented.
(Article 59 supplemented by HO-256-N of 22 December 2010, edited, supplemented by HO-105-N of 17 June 2016)
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Article 60. |
Submission of the financial recovery plan |
1. The financial recovery plan may be submitted by the debtor, administrator, creditors possessing at least 1/3 of the secured claims, creditors possessing at least 1/3 of the unsecured claims, as well as persons possessing at least 1/3 of the authorised (share, equity) capital of the debtor.
1.1. Evidence on the copy of the financial recovery plan having been forwarded to the administrator shall be submitted to the Court attached to the financial recovery plan (except for the cases of the plan being submitted by the administrator).
2. The financial recovery plan must be submitted prior to the first meeting. Upon the motion of the person entitled to submit the financial recovery plan, the Court may extend the term of submission of the plan for another 30 days. Along with the financial recovery plan, all the information, including financial information that have served as a ground for the financial recovery plan of the debtor, shall be submitted to the creditors, as well as to the persons who are likely to finance the programme envisaged by the recovery plan, based on a request.
3. Expenses for implementation of the financial recovery plan proposed by a creditor or by persons possessing 1/3 of the authorised (share, equity) capital of the debtor, and court expenses necessary for the approval thereof shall be incurred by the proposing party. The expenses of the financial recovery plan proposed by the administrator or the debtor shall be covered at the expense of the debtor’s estate.
(Article 60 supplemented by HO-105-N of 17 June 2016, HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 61. |
Mandatory conditions for the financial recovery plan |
1. The financial recovery plan must include:
(a) the schedule for discharge of liabilities with respect to secured, unsecured and other groups of creditors, the procedure for making payments in exchange of the claims thereof, including the procedure for satisfaction of claims with immovable property belonging to the debtor and other property subject to state registration;
(b) the procedure for and the extent of exempting the debtor from obligations, postponing or rescheduling them;
(c) the content, as well as the procedure and time limits for implementation of the measures provided for by Article 59 of this Law for the purpose of restoring solvency of the debtor, the justifications for increasing opportunities for satisfying the claims of creditors when continuing the activities of the debtor as a result of implementation of those measures, the composition of the property being sold, in case of sale of the property belonging to the debtor;
(d) the procedure for and amounts of remuneration of the administrator, other specialists, and the executive of the debtor, as well as compensation for administrative expenses necessary for carrying out the financial recovery plan.
2. Without the written consent of the creditor, the financial recovery plan may not envisage other priority order of claims of that creditor than the order provided for by this Law. Where the given creditor has not given other written consent, none of the creditors shall be in less favourable conditions in the envisaged result of the financial recovery plan than if the debtor was liquidated.
3. The financial recovery plan may not conflict with the legislation of the Republic of Armenia and infringe the interests of other persons.
4. When — in the course of implementing the financial recovery plan - the property pledged for the claim of the secured creditor (creditors) is to be used, the consent of the secured creditor (creditors) shall be binding for consideration or approval of the financial recovery plan.
5. Where the financial recovery plan envisages provision of funding to the debtor by other persons, the consent of the financing person shall be mandatory for approval of the given plan. The claims of persons having provided financing or having acquired bonds or bills of exchange within the scope of the financial recovery plan of the debtor shall have priority of satisfaction over all the other claims and shall be satisfied from the net profit (net income) generated from the activities of the debtor during implementation of the financial recovery plan, unless otherwise provided for by the financial recovery plan of the debtor or by the written consent of the financing person and creditors.
(Article 61 edited by HO-13-N of 22 December 2010, HO-105-N of 17 June 2016)
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Article 62. |
Discussion of the financial recovery plan |
1. Within two days after receiving the financial recovery plan, the Court shall adopt a decision on returning the financial recovery plan, if it does not comply with the requirements prescribed by this Law, or the evidence on the copy of the financial recovery plan having been forwarded to the administrator has not been submitted (except for the cases of the plan being submitted by the administrator). The Court shall indicate upon the decision the existing shortcomings and prescribe a three-day time limit to fix the existing shortcomings and submit the financial recovery plan again. Before adopting a decision, the Court may require from the person submitting the plan to present the opinion of an expert thereon.
2. The financial recovery plan shall be deemed to be submitted within the time limit, where the shortcomings are eliminated and it is submitted to the Court again within the prescribed time limit after the decision on returning the financial recovery plan is received.
3. The Court shall, within a two-day period, render a decision on leaving the financial recovery plan without consideration, where, in case of returning the financial recovery plan as provided for by part 1 of this Article, the shortcomings have not been eliminated within the prescribed time limit, or new violations have been committed in case of submitting it again.
4. Where, within two days after receiving the financial recovery plan or being submitted again in case of returning the financial recovery plan the Court does not adopt a decision on returning or leaving the financial recovery plan without consideration, it shall notify the administrator, debtor and all the creditors known to it about the availability of the financial recovery plan and their right to get acquainted with the plan.
5. The administrator shall, within no later than 20 days after the expiration of the time limit for submitting the financial recovery plan, prescribed by this Law or by a court decision on extending the time limit, convene a meeting to discuss the financial recovery plan (plans) whereto the debtor is invited.
(Article 62 edited by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 63. |
Voting for the financial recovery plan |
1. In case of discussing more than one financial recovery plan, all the plans shall be voted for during one meeting.
2. Only creditors with approved claims may participate in the voting, except for creditors with secured claims and creditors with claims provided for by point (i) of part 1 of Article 82 of this Law. Financial recovery plan shall be voted by the secured creditors, where all creditors in the bankruptcy case are secured creditors. The creditors having claims stemming from cash liabilities owed to the State Budget of the Republic of Armenia may, in cases and in the manner prescribed by the Government participate in voting for the financial recovery plan. The creditors having claims stemming from cash liabilities owed to the community budget may participate in voting for the financial recovery plan and vote in favour of it, where the community council of elders has rendered a decision thereon.
3. The financial recovery plan shall be deemed to be adopted when voted for by simple majority of creditors, whereon the Meeting shall take a decision.
4. Where more than one plan is voted, they shall be voted in accordance with the priority of submission. According to part 1 of this Article, the remaining plans shall not be voted after the financial recovery plan has been adopted.
(Article 63 amended by HO-246-N of 24 October 2007, edited by HO-294-N of 12 December 2019)
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Article 64. |
Approval of the financial recovery plan |
1. The financial recovery plan shall be approved by a court decision in case of its adoption by the decision of the Meeting and in case of compliance with the requirements prescribed by this Law. Otherwise, the Court shall adopt a decision on rejecting the financial recovery plan and on liquidating the debtor.
2. When submitting the financial recovery plan to the Court for approval after being adopted by the Meeting of Creditors, the debtor shall be obliged to submit to the court the list of creditors not having filed claims. Creditors not having filed claims shall, as prescribed by the Civil Procedure Code of the Republic of Armenia, be notified about the bankruptcy of the debtor and the necessity to file the claims of the creditors with the Court within a one-month period. An indication on the legal consequences of failing to file a claim shall be made in the notice.
The requirements prescribed in paragraph 1 of this part shall be discussed by the Court as prescribed by part 2 of Article 85 of this Law.
Where creditors file new claims with the Court upon approval of the financial recovery plan, the person entitled to submit the financial recovery plan may, within a one-month period, submit to the Court a new financial recovery plan or amendments to the approved plan. The new financial recovery plan or amendments to the approved plan shall be submitted to the Court and approved as prescribed by this Law.
Where the notified creditor fails to file a claim, the debtor shall be released from liability after closure of the bankruptcy case on the ground of financial recovery of the debtor. The creditors who have not been notified shall maintain the right to file a claim against the debtor.
(Article 64 edited by HO-105-N of 17 June 2016)
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Article 65. |
Consequences of approving the financial recovery plan |
1. After the approval of the financial recovery plan, the activities of the debtor shall be carried out only within the framework of the plan, and the claims of creditors shall be satisfied as prescribed by the plan.
2. Under the supervision of the administrator, the debtor shall be obliged to implement all the measures provided for by the financial recovery plan.
3. During the period of operation of the financial recovery plan, the governing bodies of the debtor, including its executive, shall function within the scope of competences provided for by the financial recovery plan.
4. At least once in three months, the administrator shall submit to the Court a report on implementation of the measures provided for by the financial recovery plan.
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Article 66. |
Extending the duration of the financial recovery plan |
1. The Meeting of Creditors shall be obliged to discuss and determine the issue of extending the duration of the financial recovery plan or making amendments thereto, where the persons provided for by part 1 of Article 60 of this Law file an application.
2. The judge shall adopt a decision on extending the duration of the financial recovery plan for up to 12 months or on making amendments thereto, where the decision was adopted in compliance with the requirements — set under this Law — for the adoption of the financial recovery plan.
3. Upon initial approval by the Court, the total duration of the financial recovery plan may not exceed 72 months, and the duration of the initially approved financial recovery plan may not exceed 36 months.
(Article 66 edited, supplemented by HO-105-N of 17 June 2016)
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Article 67. |
Early completion of the financial recovery plan |
1. When the claims of creditors are satisfied prior to the expiry of the operation of the financial recovery plan, the administrator shall submit a report to the Court on early completion of the financial recovery plan. In case the report on early completion of the financial recovery plan is approved, the bankruptcy case shall be subject to closure.
2. Where the claims of creditors are not satisfied at the moment of submitting the report, the Court shall reject approval of the report of the administrator, and the financial recovery plan shall continue.
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Article 68. |
Early termination of the financial recovery plan |
1. The Court may early terminate the financial recovery plan. The grounds for early termination of the financial recovery plan shall be the following:
(a) essential breach of the schedule for discharge of liabilities provided for by the financial recovery plan;
(b) existence of circumstances that evidence the incapability of the debtor to comply with the schedule for discharge of liabilities;
(c) new claims have been submitted to the Court upon approval of the financial recovery plan, while no amendments to the plan have been submitted within a one-month period providing satisfaction of newly submitted claims, or such amendments have been submitted to Court and have been rejected upon a court decision.
2. The administrator, debtor, any of the five unsecured creditors with larger claims, as well as the secured creditor (creditors) referred to in part 4 of Article 61 of this Law may apply to the Court with the request for early termination of the financial recovery plan.
3. Where there are grounds for early termination of the financial recovery plan, the Court shall early terminate the financial recovery plan and render a decision on liquidating the debtor. Otherwise, early termination of the financial recovery plan shall be rejected.
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Article 69. |
Completion of the financial recovery plan |
1. Not later than 15 days prior to the expiry of the operation of the financial recovery plan, the administrator shall submit a report to the Court on the completion of the financial recovery plan.
2. The following shall be attached to the report of the administrator:
(a) the financial report of the debtor as of the most recent reporting period;
(b) the register of the claims of creditors, indicating the satisfied claims;
(c) documents verifying satisfaction of the claims of creditors.
3. The judge shall, not later than within two weeks and not earlier than within one week upon receipt of the report on completion of the financial recovery plan, convene a court session, informing the administrator, debtor and creditors thereon at least three days prior to the court session.
Where there are more than 10 creditors, a proper notification for them shall be deemed to be an announcement on the venue and time of the court session published in the printed media publishing information on state registration of legal persons. Notification for the 5 largest creditors shall be sent by a registered letter with advice of delivery or by other means of communication ensuring formulation of message or delivered with a receipt.
Failure to appear by the administrator, debtor or any of the creditors shall not be an impediment for holding the court session.
4. As a result of considering the administrator’s report on completion of the financial recovery plan and the creditors’ objections regarding the completion of the financial recovery plan, the Court shall:
(a) render a judgment on approving the administrator’s report on completion of the financial recovery plan and closing the bankruptcy case, if the claims of creditors have been satisfied;
(b) render a decision on rejecting approval of the report of the administrator on completion of the financial recovery plan and liquidating the debtor, if the claims of the creditors have not been satisfied.
CHAPTER 9
PROCEEDINGS FOR LIQUIDATION OF LEGAL PERSONS AND TERMINATION OF ACTIVITIES OF DEBTOR INDIVIDUAL ENTREPRENEURS
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Article 70. |
Proceedings for liquidation of a debtor legal person and termination of activities of a debtor individual entrepreneur |
1. In case of failure to submit a financial recovery plan within the time limit prescribed by this Law, rejection of approval of the submitted plan, early termination of the financial recovery plan, rejection of approval of the report of the administrator on completion of the financial recovery plan, the Court shall render a decision on initiating proceedings for liquidation of the debtor legal person or terminating the activities of debtor individual entrepreneur (hereinafter referred to as “liquidation of the debtor”).
2. Within a five-day period after the decision on liquidation of the debtor is rendered, the administrator shall publish the decision in the printed media publishing information on state registration of legal persons. The Court shall forward a copy of the decision on liquidation of the debtor to the body carrying out state registration of legal persons, for the purpose of making a relevant record.
3. After the publication of the decision on liquidation of the debtor, the administrator shall sell the property of the debtor in the manner prescribed by this Law.
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Article 71. |
Putting a lien on the debtor’s property |
1. Within seven days after the Court renders a decision on liquidation of the debtor, the administrator shall, based on a court decision, put a lien on the property belonging to the debtor by right of ownership, except for the property which, in accordance with the legislation of the Republic of Armenia, cannot be subjected to levy execution.
2. Where the debtor has property in other countries by right of ownership, the administrator shall, in cases provided for by the international treaties of the Republic of Armenia, in accordance with the decision of the relevant court of the Republic of Armenia and through the Ministry of Justice of the Republic of Armenia, apply to the courts of those countries with the assignment to put a lien on the specified property. Putting a lien in other countries on the property belonging to the debtor, may only be carried out as prescribed by the legislation of the country concerned.
3. Putting a lien on the share of the debtor participant of the fund provided for by the Civil Code of the Republic of Armenia in the assets of the fund shall be carried out on the equity (equities) of the fund (except for the mandatory pension fund) belonging thereto by way of putting a lien.
(Article 71 supplemented by HO-67-N of 18 May 2010, edited by HO-256-N of 22 December 2010)
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Article 72. |
Suspension of activities of the debtor |
1. Where the Court has rendered a decision on liquidating the debtor, all the rights of the debtor to manage or dispose the property shall be suspended by a court decision.
2. Upon the decision of the judge, the rights of the debtor to manage or dispose the property may be suspended also prior to liquidation of the debtor, where the activities of the debtor are clearly unprofitable, may lead to decrease of the value of the property belonging to the debtor, or it is obvious that the debtor is not able to submit a financial recovery plan acceptable for the creditors.
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Article 73. |
Resumption of activities of the debtor |
1. Where the activities of the debtor have been suspended in the manner provided for by Article 72 of this Law, the debtor may, upon a court decision rendered on the ground of the motion of the administrator, fully or partially resume its activities for a term of up to one year, where resumption of the activities of the debtor may increase the possibility of satisfaction of the claims of creditors. Based on the motion of the administrator, the Court shall render a decision on partially or fully resuming the activities of the debtor, of which all creditors shall be notified within a three-day period after the decision is rendered.
2. Where, within 7 days after receiving the decision of the court on fully or partially resuming the activities of the debtor, any of the creditors files a written objection with the Court, the administrator shall convene a sitting of the Board, and in case the Board is not formed - a Meeting to bring up the matter for consideration. The administrator shall submit to the Court the decision of the Board or Meeting and the minutes of the sitting.
3. In the case prescribed by part 2 of this Article, the Court shall render a decision on satisfying or rejecting the motion without convening a court session. The administrator shall forward the decision of the court to the creditors and the relevant tax body within a three-day period. The decision of the court may be appealed against.
4. The period of resumed activities of the debtor may be extended upon the decision of the court rendered based on the decision of the Meeting and the motion of the administrator, where the resumed activities of the debtor has increased the possibility of satisfying the claims of creditors. In this case, the period for extension of the activities of the debtor may not exceed a total of 36 months.
5. Resuming the activities of the debtor fully or partially shall not be a prohibition for carrying out the process of satisfying the claim at the expense of the property of the debtor, including based on the legal regulations provided for by Articles 75-77 of this Law, except for the property which is used to ensure the resumed activities of the debtor.
(Article 73 supplemented by HO-13-N of 22 December 2010, edited by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 74. |
Report of the administrator in case of resumption of activities of the debtor |
1. Every month, the administrator shall be obliged to submit a report to the Court regarding the resumed activities of the debtor.
2. The reports of the administrator shall be discussed quarterly in the Meeting of Creditors or in the Board.
3. Where, as a result of resumption of activities of the debtor, all the claims of creditors are satisfied, the administrator shall submit a final report to the Court, containing a substantiated motion on closure of the case. The final report of the administrator shall contain summarised information on collection of assets of the debtor. The final balance sheet of the debtor shall be attached to the report.
4. The following shall be attached to the final balance sheet of the debtor to be submitted to the Court:
(a) the register of the claims of creditors, indicating the satisfied claims;
(b) documents verifying the satisfaction of the claims of creditors.
5. The administrator shall notify all creditors about submitting the final balance sheet and the report to the Court and recommend them to familiarise themselves with the copy of those documents deposited with him or her within a ten-day period, after which the final balance sheet and the report are submitted to the Court.
6. The judge shall, within 15 days after receiving the final balance sheet, without convening a court session, consider the motion on closing the case, except for the cases when the Court comes to the conclusion at own initiative or upon the motion of the parties that the motion needs to be considered at the court session.
6.1. Where the motion needs to be considered at the court session, the Court shall, within a period not later than 15 days and not earlier than 10 days after receiving the final balance sheet, convene a session and notify the administrator and creditors about it at least three days prior thereto. Where there are more than ten creditors, a proper notification for them shall be deemed to be the announcement on the venue and time of the court session published in the printed media publishing information on state registration of legal persons. Failure of any of the creditors to appear shall not be an impediment for holding the session.
7. By approving the final balance sheet, the judge shall render a judgment on terminating the liquidation proceeding and closing the bankruptcy case against the debtor. Otherwise, the Court shall reject the approval of the final balance sheet and the motion of closing the case by stating the reasons for rejection.
(Article 74 supplemented, edited by HO-580-N of 23 December 2022)
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Article 75. |
Sale of the property of the debtor |
1. Sale of the property of the debtor shall be carried out by the administrator, in accordance with the property disposal plan presented as a result of his or her inventory and approved by the Board of creditors, and in the case Board of creditors is not formed — by the Meeting of Creditors and upon authorisation of the Court, through public auction or a direct transaction.
1.1. The plan for sale of the property must contain detailed information about the entire estate, including information about the rights to the claim (names, description, quantity, balance value), form envisaged for sale and initially assessed values, according to type of property. Where the plan for sale of the property is not approved by the Board of Creditors or the Meeting of Creditors, the administrator shall apply to the Court, motioning to approve the plan for sale of the estate, by attaching the decisions of the Meeting of Creditors or Board of Creditors and the grounds for impossibility to hold (failure to hold) the session of the Meeting of Creditors or Board of Creditors. Amendments to the plan shall be made in the manner prescribed for acceptance of the plan.
2. Sale of the property of the debtor shall be authorised only after initiating liquidation proceedings against the debtor, except for the cases prescribed by this Law.
2.1. Where in case of existence of the decision on authorising sale of the object of the secured right and approving the size of the claim in accordance with the procedure prescribed by Article 39.1 of this Law the secured creditor has not yet commenced the process of selling the object of the secured right, including the process of judicial forfeiture, and the debtor has no property and certain claims are still not granted, the administrator shall, within a period of one week after sale of the last property, file a motion with the Court to sell the object of the secured right.
3. In case of approval of the financial recovery plan, sale of the property of the debtor shall be carried out in the manner provided for by the plan.
4. The peculiarities of sale or alienation in another manner, hiring out or pledging of the property belonging to payment and settlement organisations shall be defined by the Law of the Republic of Armenia “On payment and settlement organisations and payment and settlement systems”.
5. Putting a lien on the share of the debtor participant of the fund provided for by the Civil Code of the Republic of Armenia in the assets of the fund shall be carried out on the equity (equities) of the fund (except for the mandatory pension fund) belonging thereto by way of alienation, as prescribed by law.
(Article 75 supplemented by HO-256-N of 22 December 2010, HO-105-N of 17 June 2016, HO-294-N of 12 December 2019, amended by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 76. |
Sale of the property belonging to the debtor through public auction in the course of liquidation process |
1. The administrator shall file with the Court a motion to sell the property of the debtor through public auction, informing the creditors thereon three days in advance, as prescribed by part 1 of Article 34 of this Law. The motion shall indicate the location of the property, the description thereof, the starting price offered at auction.
The valuation act of the property (or the opinion in case the valuation is done by an independent valuer) shall be submitted attached to the motion.
2. Creditors shall have the right to file a written objection with the Court against the motion of the administrator to authorise the sale of the property of the debtor through public auction within a seven-day period and recommend a higher starting price for the auction, making a deposit to the special bankruptcy account in the amount of 5% of the starting price offered by the creditor for sale of the property, but not more than AMD 5 million. The document verifying the payment of the deposit shall be attached to the objection. If more than one creditor has filed an objection, realisation of the property through public auction shall be authorised at the highest starting price offered. Where the auction declared with the highest starting price offered does not take place, the property shall be presented for sale at the next highest starting price, and auctions shall be organised through this procedure so long as the property has not been presented at a starting price offered with an objection that includes the lowest starting price. Where the property of the debtor is not sold in case of being presented at an auction with the price offered by the creditor having filed an objection, the sum of the deposit paid by the particular creditor shall not be returned.
3. Within a period of three days after expiry of the time limit for filing objection to the motion of the administrator, the Court shall render one of the following decisions:
(a) on authorising the sale of the property by satisfying the motion of the administrator, unless any of the creditors has filed an objection with the Court within the time limit and in the manner prescribed by part 2 of this Article;
(b) on authorising the sale of the property in the manner prescribed by part 2 of this Article, selling the property as prescribed by the motion of the administrator if it is not sold in the prescribed manner, where at least one objection has been filed in accordance with part 2 of this Article;
(c) on rejecting the motion of the administrator, if the administrator has not observed the requirements prescribed by this Law.
4. Where the property of the debtor is not sold through public auction, an additional decision of the Court on continuing the sale of the property by the administrator through public auction (double auction) shall not be required.
Upon the motion of the administrator and by a court decision, realisation of the property through public auction shall be interrupted, where there have been sharp changes in the composition of property to be sold (as compared to previous auctions), as well as in market prices, or if the secured creditor or pledgor has, as prescribed by law, enjoyed his or her rights prescribed by part 9 or part 10 of Article 43 of this Law, or if, upon a decision of the court, the Court renders a decision with regard to property subject to sale through public auctions on authorising the sale through direct sale, or if the given property is subject to realisation within the scope of other bankruptcy proceedings as prescribed by this Law .
The administrator shall immediately inform the five largest creditors about the decision of the Court on interrupting realisation of the property through public auction.
If realisation of the property of the debtor through public auction is interrupted, it may be realised again through public auction by a court decision issued as prescribed by parts 1 and 2 of this Article.
5. The administrator shall publish in the printed media that publishes information on state registration of legal persons an announcement on sale of the property belonging to the debtor through public auction.
The administrator may also publish information on sale of the property belonging to the creditor through public auction by other means of mass media.
Sale of the property belonging to the debtor shall be arranged not earlier than 15 days after the last announcement made by means of media, as prescribed by law or other legal acts.
6. Where the property (including receivables, securities proving the right to payment claim and other rights to claim) are not realised after double and any subsequent auction, the creditors whose claims have not been satisfied as of the date and are included in the preceding category for satisfaction of claims, shall have the right to require the administrator to transfer the property at its starting price as a common shared ownership of all the creditors of the group based on the shares proportionate to their recorded claims, provided that the creditors, prior to conclusion of purchase transaction at the expense of insolvency, shall fulfil tax obligations deriving from realisation of the property, make expenses for maintenance of the property, recognition (registration) of the right, for assessment and realisation, additional remuneration of the administrator in the amount of 1% and the difference, where available, between the starting price of the property and the amount of the claims recorded with regard to that creditor.
7. The administrator shall be obliged to initiate the auctions of the rights to the claim (receivables, securities proving the right to payment claim) included in the composition of the property of the debtor not later than two months after the decision on liquidation and, with a 15-day periodicity, organise every subsequent auction by reducing the starting price of the invalidated auction by 10%.
8. The property owned by the debtor shall be sold through electronic website envisaged for public auctions, in accordance with the procedure prescribed by secondary regulatory legal act of the Minister of Justice of the Republic of Armenia.
9. The list of entire property to be sold through public auctions shall be posted on the website envisaged for public auctions in a bankruptcy case.
9.1. The following may not participate in public auctions in a bankruptcy case:
(1) the administrator organising the auctions;
(2) the children, spouse, grandparents, siblings of the administrator organising the public auctions, as well as the parents, grandparents and siblings of the spouse of the administrator organising the public auctions;
(3) persons who may not have a right of ownership over the lot that is on sale through auctions.
9.2. While concluding contracts on purchase and sale of property sold as a result of auctions, the essential terms of the contracts must comply with the terms prescribed through public notice on auctions.
10. Where a property has been sold through auction or direct sale or the property has been transferred to the creditor in accordance with the procedure prescribed by law, the decision of the Court on authorising sale of the property and the contract of purchase and sale of the property serve as a ground for making the required records in the state register of rights over property.
(Article 76 edited, supplemented by HO-13-N of 22 December 2010, amended by HO-298-N of 21 December 2017, amended, edited, supplemented by HO-294-N of 12 December 2019, HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
(part 11 of the Article as amended by point 7 of Article 26 of Law HO-27-N of 16 January 2024 shall enter into force from the tenth day following publication of the announcement of the Ministry of Justice regarding the launch of the electronic website envisaged for public auctions)
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Article 77. |
Sale of property belonging to the debtor through direct transaction |
1. Where the administrator intends to sell the property belonging to the debtor through direct transaction, he or she shall convene a sitting of the Board, and if the latter is not formed — a Meeting to bring up the matter for discussion. The administrator shall, along with his or her motion, submit to the Court the decision of the Board or Meeting on approving or disapproving the intention of the administrator related to direct transaction and the minutes of the sitting of the Board. The motion shall indicate the location of the property, the description thereof, the selling price and the potential buyer.
Without convening a court session, the judge shall render a decision on satisfying or rejecting the motion.
The judge shall reject the motion, where there is a decision of the Board on disapproving the intention of the administrator related to direct transaction.
1.1. The administrator shall send a notice on purchasing the share of the debtor in the property belonging thereto by the right of common ownership and not being an object of pledge at the assessed market price of that property at the value corresponding to the share of the debtor to the co-owners of that property.
Where all co-owners of the property submit to the administrator the consent to the purchase — by all co-owners or one or several of them — of the of the debtor at the offered price and evidence to the effect that the sum in the amount of the sale price offered by the administrator has been credited to the special bankruptcy account, the administrator shall inform the debtor and creditors thereon and file a motion with the Court on obtaining authorisation to sell the of the debtor in the property to the co-owner(s) through direct sale.
Where not all co-owners express the desire to purchase the share of the debtor at the offered price, by attaching to the consent the evidence to the effect that the sum in the amount of the sale price offered by the administrator has been credited to the special bankruptcy account, the motion on obtaining authorisation to sell the share of the debtor in the property through direct sale may be filed with the Court only after the expiry of one month after the co-owners are notified of the purchase of the share of the debtor in the property.
The act on evaluation of the property (in case of being evaluated by an independent evaluator — the opinion), the notice addressed by the administrator to the co-owners, the evidence that they have been notified, the carbon copies of the passports of the co-owner(s) having expressed the desire to purchase, the consents of the co-owners, the evidence to the effect that the sum indicated in the notice has been paid to the special bankruptcy account, and the proofs of notifying the debtor and creditors of submitting the motion to the Court shall be attached to the motion filed with the Court.
The Court shall, within a one-week period after receiving the motion, render a decision on granting the motion and authorising the sale of the share of the debtor in the property that is common ownership to the co-owner(s) through direct sale, where the motion was filed in compliance with this part.
Where, within a one-month period after being notified of the purchase of the share of the debtor at the offered price, at least one of the co-owners of the property does not express the desire to purchase the share of the debtor or fails to submit evidence to the effect that the sum in the amount of the sale price offered by the administrator has been credited to the special bankruptcy account, the administrator shall file a statement of claim with the Court conducting the bankruptcy case on the claim to separate the share of the debtor in the property, in case of impossibility to separate it — to sell the property through public bidding and to distribute the amount received from the sale among the co-owners, in accordance with the shares thereof.
The court judgment on selling the inseparable property through public auctions shall serve as a ground for the administrator to sell the property through public bidding.
2. Convening a sitting of the Board, and if the latter is not formed — the Meeting for sale of the property of the debtor with a price not exceeding 1% of the value of the property existing at the given moment, shall not be mandatory, except when the price of the property on sale is more than AMD 5 million.
3. Sale of the property through direct transaction to a person affiliated with the administrator or any of the creditors shall be prohibited.
(Article 77 supplemented by HO-13-N of 22 December 2010, HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 77.1. |
Submission by the administrator of a request for eviction or transfer of property to the administrator |
(title edited by HO-27-N of 16 January 2024)
1. In the motion on authorising the property belonging to the debtor, as well as the object of the secured right belonging to third parties the administrator shall include a claim to evict the owner occupying immovable property and the persons whose right of use is not registered as prescribed by law, by attaching to the motion evidence substantiating the claim for eviction, as well as evidence on sending the copy of the motion to those persons. Within a period of one week after receipt of the copy of the motion, such persons may file objections to the Court with respect to the motion. The claim of the administrator shall be decided on without convening a court session, with a decision on resolving the issue of authorising sale. In case of granting the motion, the writ of execution drawn up on the basis of the court decision shall be forwarded for compulsory enforcement.
2. The administrator may file a motion to the Court also with the claim to evict persons holding the sold real estate without legal grounds, attaching to the motion evidence substantiating the claim for eviction, as well as evidence on sending the copy of the motion to those persons. Within a period of one week following the receipt of the copy of the motion such persons may file objections to the Court with respect to the motion. The claim of the administrator shall be settled without convening a court session. In case of granting the motion, the writ of execution drawn up on the basis of the court decision shall be forwarded for compulsory enforcement.
3. The administrator may apply to the Court with a motion, requesting to oblige the debtor or a third party (where the property is possessed by another person — the actual possessor) to transfer the movable property belonging thereto or that is an object of secured right (actually possessed thereby) to the administrator, where the debtor or the third party (the actual possessor) fails to provide the property or obstructs the inventory-taking activities, inspection by the bidder of the auction, fails to provide or obstructs the transfer of the property to the person having won the auction, as well as where leaving the property in the possession of the debtor or the third party (the actual possessor) may deteriorate the actual condition of the property or reduce the value of the property.
The motion must contain the substantiation for the claim to transfer the property to the administrator, as well as the evidence on sending the carbon copy of the motion to those persons.
Within a one-week period after receipt of the carbon copy of the motion, these persons may submit objections to the motion to the Court. The claim of the administrator may be disposed of without convening a court session, by a decision of the court. Where the motion is granted, the writ of execution drawn up based on the court decision shall be forwarded for compulsory enforcement.
(Article 77.1 supplemented by HO-294-N of 12 December 2019, edited, supplemented by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
(Article as amended by HO-192-N of 11 April 2024 shall enter into force from 1 January 2026 and shall be in effect in accordance with the decision of the Government provided for by part 4 of Article 23 of the Law “On enforcement proceedings”, from the moment of introducing the system ensuring electronic transfer — by the court — of the data required for instituting enforcement proceedings to the Compulsory Enforcement Service and the system for the court, the Constitutional Court, the Supreme Judicial Council (the staffs thereof) for electronic submission of applications on compulsory enforcement)
(Law HO-192-N of 11 April 2024 has a transitional provision)
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Article 78. |
Income received from the use of property |
Income received from the management and disposal of the property belonging to the debtor shall be transferred to the special bankruptcy account of the debtor and distributed among the creditors together with the proceeds generated from the sale of the property.
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Article 79. |
Transfer of proceeds generated from the sale of the property of the debtor |
Proceeds generated (compensated) from the sale (alienation) of the property of the debtor shall be transferred to the special bankruptcy account of the debtor, and the receipts shall be delivered to the administrator.
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Article 80. |
Distribution of proceeds generated from the sale of property |
1. The proceeds generated (compensated) from sale (alienation) of the property of the debtor shall be distributed pursuant to the priority order provided for by this Law in compliance with the interim distribution plan approved by the administrator and accepted (not objected) as prescribed by this Article.
2. Expenses related to the maintenance and transfer of the property, as well as remuneration for the administrator shall be paid on a priority basis from the proceeds generated from sale of the property secured against the liabilities of the debtor.
3. The administrator shall submit two copies of the interim distribution plan approved by himself or herself to the Court and furnish the debtor and creditors each with a copy. Where there are more than ten creditors, the administrator shall submit the distribution plan to the Court with the motion to deposit it and shall publish an announcement thereon in the printed media publishing information on state registration of legal persons.
4. Where creditors do not submit an objection in writing on the distribution plan to the Court within seven days following receipt of the copy of the distribution plan or publication of the announcement, the distribution plan approved by the administrator shall be deemed to be accepted.
The judge shall return one copy of the distribution plan submitted by the administrator to him or her with an indication thereon about not being objected within a period prescribed by law and authenticated by his or her seal.
5. Where the creditor (creditors) submits (submit) an objection in writing on the distribution plan to the Court within seven days following receipt of the copy of the distribution plan or publication of the announcement, the Court shall, within seven days following receipt of the objection, without convening a court session, render a decision on upholding, on amending or on rejecting the interim distribution plan proposed by the administrator.
5.1. Where the Court comes to the conclusion upon own initiative or upon the motion submitted by the debtor that the objection needs to be considered at the court session, the Court shall, within seven days, convene a court session and notify the administrator, debtor and creditors about the venue and time in the printed media that publishes information on state registration of legal persons by making an announcement or sending a notice at least three days before the session. Notification to the five largest creditors shall be sent by a registered letter with advice of delivery or by other means of communication ensuring formulation of message or delivered with a receipt. Based on consideration of the objections, the Court shall render a decision on upholding, amending or rejecting the interim distribution plan proposed by the administrator.
6. (part repealed by HO-580-N of 23 December 2022)
(Article 80 amended by HO-89-N of 3 March 2021, edited, supplemented, amended by HO-580-N of 23 December 2022)
(Law HO-89-N of 3 March 2021 has a transitional provision)
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Article 81. |
Report on satisfaction of the claims of creditors |
1. The administrator shall, from the moment of adoption of the decision on liquidation of the debtor, be obliged to submit to the Court a report on the measures that he or she has taken for the sale of the property of the debtor, distribution of the proceeds generated therefrom, satisfaction of the claims of creditors and collection of the property and assets (including receivables) of the debtor.
2. Monthly report shall be submitted on or before the tenth day of the next month.
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Article 82. |
Priority order in satisfaction of unsecured claims |
(title amended by HO-235-N of 23 June 2011)
1. Unsecured claims of creditors shall be satisfied in the following order:
(a) remuneration of the administrator (temporary administrator) and administrative expenses, including:
- the expenses required to maintain and dispose the property (financing in the period between the day of submitting the bankruptcy application and approval of the financial recovery plan),
- salaries of administrative employees, payments of income tax and mandatory social payments,
- other administration costs required for maintenance of the administrative staff,
- mandatory social payments,
- expenses for archiving the documents on salaries, income tax and mandatory social payments;
(b) the claims of citizens before whom the debtor bears liability for causing harm to their life or health, by means of calculation of capitalisation of regular payments, as well as the alimony claims against the debtor citizen (child, incapacitated parents and incapacitated spouses);
(c) the claims arising from employment contracts (including those emerged within the period from entry into legal force of the judgment on declaring the debtor bankrupt up to liquidation) but not more than six months preceding the moment of declaring the debtor bankrupt, payments of remunerations under copyright contracts and the amounts of the income tax, social payment and stamp duty generated in the same period;
(d) judicial costs;
(e) the tax obligations arising from realisation of the property of the debtor upon entry into legal force of the court judgment on declaring the debtor bankrupt;
(e. 1) the unsecured claims that have arisen in regard to obligations assumed by the debtor in the case prescribed by part 3.1 of Article 40 of this Law;
(f) the unsecured claims that have emerged upon entry into legal force of the judgment on declaring the debtor bankrupt, as a result of the operations (including resumption of activities) carried out as prescribed by this Law;
(g) the claims of unsecured creditors, including the mandatory social payments and the obligations generated before the State Budget and community budgets of the Republic of Armenia with respect to taxes and/or payments, fines arisen from administration on the ground of levy of the amount from the debtor declared as bankrupt or being in the proceedings of a civil, administrative or arbitration tribunal with the claim to transfer the property, or declaring the debtor as bankrupt in another bankruptcy case — the amount of judicial expenses in the dismissed or completed case, except for the claims of secondary unsecured creditors;
(h) the claims of secondary unsecured creditors in accordance to Article 83 of this Law;
(h. 1) claims of the competent body envisaged by the Law of the Republic of Armenia “On civil forfeiture of illegal assets”;
(i) the claims of the founders of the debtor (participants, shareholders, members or partners).
2. The payments made through capitalisation of regular payments with respect to the damage provided for by sub-point (b) of this Article, as well as alimonies for incapacitated parents and spouses shall be calculated before the citizen attains the age of 70, but not less than for 10 years, and the alimony for the child shall be calculated before the child becomes an adult. Where the citizen is more than 70 years old, the period of capitalisation of payments shall be of 10 years. The amount capitalised for compensating the harm and alimony shall be paid in regular payments, or in a lump sum — in case of consent of the person entitled to compensation.
The Government shall establish the amount and the manner of capitalising the amounts for compensation and payment thereof.
3. (part repealed by HO-235-N of 23 June 2011)
4. Point (a) of part 1 of this Article shall include the claims of persons having granted credits or obtained bonds or bills of exchange of the debtor within the scope of implementation of the financial recovery plan approved by the Court, where the given claim is not secured by pledge of property under the financial recovery plan, or priority of satisfaction of that claim is not envisaged over the salary of the administrator and administrative expenses.
5. In case of liquidation of the fund manager, only the claims of creditors with the liabilities linked to management of the given fund that are subject to fulfilment at the expense of the assets of the fund, pursuant to law, shall be satisfied at the expense of the assets of the fund (funds) managed by the fund manager and deemed to be the property thereof. Residual fund assets shall, as prescribed by law, be transferred to other fund manager.
5. Where the existing funds are not sufficient to pay the salaries of the employees prescribed by part 1 of this Article in full, payment of the salaries shall be made proportionately, or payment of the salaries shall be made by accepting as a basis the amount of the salary in the ascending order of priority.
(Article 82 amended by HO-246-N of 24 October 2007, supplemented by HO-67-N of 18 May 2010, HO-13-N of 22 December 2010, amended by HO-235-N of 23 June 2011, supplemented, edited, amended by HO-256-N of 22 December 2010, amended by HO-72-N of 21 June 2014, supplemented, edited by HO-105-N of 17 June 2016, amended by HO-298-N of 21 December 2017, supplemented by HO-294-N of 12 December 2019, HO-89-N of 3 March 2021, edited by HO-22-N of 16 January 2024, supplemented by HO-27-N of 16 January 2024)
(Law HO-89-N of 3 March 2021 has a transitional provision)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
(Article as amended by HO-192-N of 11 April 2024 shall enter into force from 1 January 2026)
(Law HO-192-N of 11 April 2024 has a transitional provision)
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Article 83. |
Secondary unsecured claims |
The following shall be classified as secondary unsecured claims:
(a) unsecured claims arisen from loans, borrowings or other investments extended to the debtor legal person by its founders (participants, shareholders, members or partners), where such loans, borrowings have been extended or other investments have been made by a person who acted as the founder (participant, shareholder, member or partner) of the debtor legal person at the time of extending them;
(b) claims deriving from bonds with a maturity period of ten years and more, distributed by the debtor, as well as from preferred securities;
(b.1) claims arising from subsidiary borrowings;
(c) other salary-related claims;
(d) other claims not provided for by Articles 82 and 83 of this Law.
(Article 83 supplemented by HO-56-N of 28 February 2011, edited by HO-294-N of 12 December 2019)
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Article 84. |
Procedure for satisfaction of claims |
1. In case the monetary funds of the debtor are insufficient, they shall be distributed among the creditors of relevant priority order in proportion to the amounts of claims subject to satisfaction.
2. The claims in each order shall be satisfied only after the claims in the previous order category are fully satisfied.
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Article 85. |
Satisfaction of claims not submitted to the Court within the prescribed period |
1. Unsecured claims not submitted to the Court within the period specified in part 1 of Article 46 of this Law shall be considered to be secondary unsecured claims.
2. Claims of creditors not having submitted their claims within the specified period for valid reasons may be included in the priority order corresponding to the claim concerned. The Court shall, for determining the validity of reasons for not submitting the claim within the prescribed periods and substantiation of the claims, without convening a court session, render a decision within a period of one month after receiving the claim, which may be appealed.
2.1. Where the Court comes to the conclusion upon own initiative or upon the motion filed by the debtor that the claim needs to be considered at the court session, the Court shall convene a court session by properly notifying thereof the administrator, debtor and creditors at least three days prior. In case there are more than ten people to be notified, a proper notification shall be deemed to be the announcement published in the printed media publishing information on state registration of legal persons. The claims of debtors having failed to file claims within the prescribed time limit for valid reasons shall be included in the queue complying with the particular claim, by making a relevant modification in the list of claims. Based on consideration of the validity of reasons and substantiation of the claims, the Court shall render a decision which may be appealed.
3. Claims defined by this Article shall not be subject to satisfaction, if submitted after the satisfaction of all secondary unsecured claims.
(Article 85 supplemented by HO-13-N of 22 December 2010, edited, supplemented by HO-580-N of 23 December 2022, supplemented by HO-27-N of 16 January 2024
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 86. |
Reserved amounts |
Upon the decision of the judge, funds may be reserved in the amount not exceeding 5% of the amount subject to distribution for unsecured claims. The following may be satisfied from such reserved funds:
(a) claims of creditors that are disputable and have not yet been approved by the Court;
(b) funds necessary for compensation of future expenses related to property maintenance.
CHAPTER 10
CLOSURE OF THE BANKRUPTCY CASE
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Article 87. |
Closure of the bankruptcy case upon liquidation of the debtor |
1. Not later than after 15 days upon completion of settlement with the creditors, the administrator shall submit the final report to the Court.
2. The following shall be attached to the final report submitted to the Court:
(a) documents verifying sale of the property of the debtor;
(b) the register of the claims of creditors, indicating the satisfied claims;
(c) documents verifying satisfaction of the claims of creditors.
The final report of the administrator shall include summarised information on the collection of the assets of the debtor and a substantiated motion on closure of the bankruptcy case.
3. The administrator shall notify all the creditors about submitting the final report to the Court and recommend them to familiarise themselves, within a ten-day period, with the copies of those documents deposited with him or her, after which the final report is submitted to the Court.
4. The Court shall, within 15 days upon receiving the final report, without convening a court session, consider the motion on closing the case, except for the cases when the Court comes to the conclusion upon own initiative or upon the motion of the parties that the motion needs to be considered at the court session.
4.1. Where the motion needs to be considered at the court session, the Court shall, within a period of not later than 15 days, and not earlier than ten days, convene a session and notify the administrator and creditors about it at least three days prior thereto.
Where there are more than ten creditors, proper notification for them shall be deemed to be an announcement on the venue and time of the court session published in the printed media publishing information on state registration of legal persons.
Failure of any of the creditors to appear shall not be an impediment for holding the session.
5. The judge shall, after considering the final report, render a judgment on closing the bankruptcy case as a result of liquidation of the debtor or reject the motion on closing the case by stating the reasons for rejection.
6. Where the financial recovery plan is completed upon liquidation of the debtor, it shall be completed as prescribed by this Article.
(Article 87 supplemented, edited by HO-580-N of 23 December 2022)
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Article 88. |
Duties of the administrator in case of closing the bankruptcy case as a result of liquidation of the debtor |
1. Not later than within 45 days upon entry into legal force of the judgment on completing the bankruptcy case as a result of liquidation of the debtor, the administrator shall deliver debtor’s archival documents subject to maintenance by law and other legal acts to the National Archives of the Republic of Armenia in a regulated state and shall perform all the actions prescribed by law that are necessary for state registration of the termination of activities as a result of liquidation of the debtor legal person or bankruptcy of the debtor individual entrepreneur, including of the natural person registered as an individual entrepreneur.
2. For state registration of the termination of activities as a result of liquidation of the debtor legal person or bankruptcy of the debtor individual entrepreneur, including of the natural person registered as an individual entrepreneur, the administrator shall submit the following to the body implementing state registration:
(a) application which must also indicate the state registration (registration) number of the legal person;
(b) a copy of the court judgment on closure of the bankruptcy case as a result of liquidation of the debtor;
(c) (point repealed by HO-78-N of 19 March 2012)
(d) (point repealed by HO-143-N of 19 March 2012)
(e) a document on forwarding the documents of the debtor subject to archiving to the archive.
3. The administrator shall bear liability in rem for the damage caused to third parties as a result of failure to perform the duties referred to in part 2 of this Article.
4. The rights and obligations of the administrator prescribed by this Law shall be terminated upon registration by the body implementing state registration of legal persons of the termination of activities as a result of liquidation of the debtor legal person or bankruptcy of the debtor individual entrepreneur, including of the natural person registered as an individual entrepreneur.
(Article 88 amended by HO-78-N of 19 March 2012, edited, amended by HO-143-N of 19 March 2012, supplemented by HO-105-N of 17 June 2016)
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Article 89. |
Closure of the bankruptcy case in case creditors renounce the claims, file no claims or their claims are satisfied |
1. The bankruptcy case may be closed at any stage upon the motion of the administrator or a creditor, where the claims of creditors have been satisfied (including through transfer of funds to the special bankruptcy account without any compensation by the founders, participants, shareholders and/or stakeholders for fulfilment of the liabilities of the debtor), or where the creditors have renounced their claims, or where the creditors have extended the term of fulfilment thereof, or no claim has been filed and as a result whereof the size of liabilities has decreased below the two thousand-fold of the minimum salary level and there is no default more than 90 days with respect to any liability. The report of the administrator and the final balance sheet shall be considered and a court judgment shall be rendered as prescribed by Article 74 of this Law.
2. (part repealed by HO-294-N of 12 December 2019)
(Article 89 edited by HO-13-N of 22 December 2010, amended by HO-294-N of 12 December 2019, HO-445-N of 18 September 2020)
(Law HO-445-N of 18 September 2020 has a transitional provision)
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Article 90. |
Consequences of closure of the bankruptcy case |
1. The debtor legal person shall be deemed to be liquidated, and the activity of the debtor individual entrepreneur shall be deemed to be terminated from the moment of state registration provided for by Article 88 of this Law.
2. In case of closure of the bankruptcy case in the cases provided for by part 1 of Article 67, point (a) of part 4 of Article 69, as well as Articles 74 and 89 of this Law, the debtor shall be deemed to be financially recovered and may continue his or her activity.
In such case, suspensions provided for by parts 4 and 5 of Article 13 and part 3 of Article 19 of this Law shall be eliminated from the moment of closure of the case. At the same time, the recovered person shall be exempted from all the liabilities, the claims arising wherefrom have not been submitted within the scope of the closed bankruptcy case, and those creditors shall be deprived of the right to file claims against the person recovered later, except for the cases provided for by parts 3 and 4 of this Article.
2.1. In case of completion of a bankruptcy case in the cases provided for by part 1 of Article 67, point “a” of part 4 of Article 69, as well as Articles 74 and 89 of this Law, the Court shall forward the judgment also to the Central Bank for notifying the banks and other credit organisations of the Republic of Armenia and the Central Depository of Armenia, and credit bureaus operating in the territory of the Republic of Armenia.
3. Where the bankruptcy case was closed within six months upon entry into legal force of the judgment on declaring bankrupt, the debtor shall not be exempted from all the liabilities, the claims arising wherefrom have not been filed within the scope of the closed bankruptcy case.
4. The debtor may not be declared exempt from:
(a) alimony payments;
(b) payment of arrears hidden from tax authorities within one year preceding the moment of declaring bankrupt;
(c) liabilities arising from harm caused to life and health;
(d) liabilities arising from compensation of harm caused by criminal offence;
(e) liabilities the claims arising in regard to which have not been filed for reasons beyond the control of creditors, in cases recognised as excusable.
5. The court judgment on closure of the bankruptcy case may be appealed.
(Article 90 supplemented by HO-294-N of 12 December 2019, HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
(the provision “...and those creditors shall be deprived of the right to submit claims against the person recovered later, except for the cases provided for by parts 3 and 4 of this Article” in paragraph 2 of part 2 of Article 90, systematically interconnected with part 4 of the same Article, with respect to the part by which the Court, in excusable cases, does not envisage an exception for creditors not having filed a claim within the scope of the closed bankruptcy case, setting for them a disproportionate restriction on protection of the right, shall be recognised as contradicting the requirements of Article 18 of the Constitution of the Republic of Armenia and as invalid upon Decision SDVo-1189 of 27 January 2015)
CHAPTER 10.1
PECULIARITIES OF IMPLEMENTATION OF PROCEDURAL ACTIONS AND ACTIONS RELATED TO BANKRUPTCY PROCEEDINGS ELECTRONICALLY
(Chapter as amended by Law HO-27-N of 16 January 2024 shall enter into force from the tenth day following the publication of the announcement of the Supreme Judicial Council on the launch of the electronic system)
CHAPTER 11
SPECIFICS OF BANKRUPTCY OF NATURAL PERSONS
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Article 91. |
Regulation of bankruptcy of natural persons |
The provisions of this Law shall apply to relations pertaining to bankruptcy of natural persons, unless otherwise provided for by this Chapter.
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Article 92. |
Application on declaring a natural person bankrupt |
1. The application on declaring a natural person bankrupt may be filed with the Court by the natural person concerned or by the representative thereof or by a creditor.
2. Upon the entry into legal force of the judgment on declaring a natural person bankrupt, the creditors with claims for levying of alimonies may file their claims with the Court as prescribed by this Law. The mentioned claims, in case of not being filed, shall remain valid after closure of the bankruptcy case of the natural person.
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Article 93. |
Examination of the bankruptcy case by the Court |
1. Upon the judgment on declaring a natural person bankrupt, the Court shall put a lien on the property of the natural person concerned with the exception of property which may not be levied by virtue of law.
2. Upon the motion of a natural person, the Court may remove the lien from the property (part of property) of the natural person in case third parties provide guarantee or any other security for the fulfilment of liabilities by the natural person.
The Court shall remove the lien from property of the natural person, where property with the value exceeding (by at least 30%) the liabilities of the debtor is pledged for securing fulfilment of liabilities, a guarantee is provided or cash funds equivalent to the liability are deposited with the special bankruptcy account.
3. With the application of a natural person, upon consent of known creditors, the Court may postpone examination of the bankruptcy case for a term of up to one month for the natural person to perform settlement payments or reach a conciliation agreement with the creditors.
4. In case of availability of information on the opening of inheritance in favour of the natural person, the bankruptcy case proceedings may be suspended by a court decision until the final settlement of the inheritance issue as prescribed by law.
5. Where a natural person has not submitted evidence on satisfying the claims of creditors within the time limit prescribed by part 3 of this Article and has not concluded a conciliation agreement within the specified time limit, the Court shall render a judgment on declaring the natural person bankrupt.
6. (part repealed by HO-27-N of 16 January 2024)
(Article 93 amended by HO-13-N of 22 December 2010, HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 94. |
Financial recovery plan of a natural person |
1. (part repealed by HO-105-N of 17 June 2016)
2. The legal regulations prescribed by this Law for legal persons shall apply to the relations pertaining to submission and approval of the financial recovery plan of a natural person, unless otherwise prescribed by this Article. The part of the salary of the debtor which may be levied in execution as prescribed by the legislation of the Republic of Armenia may be used in the financial recovery plan of the natural person.
The maximum term of the recovery plan of a natural person may not exceed four years.
3. (part repealed by HO-105-N of 17 June 2016)
4. (part repealed by HO-105-N of 17 June 2016)
5. (part repealed by HO-105-N of 17 June 2016)
(Article 94 amended, edited by HO-105-N of 17 June 2016, edited by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 95. |
Property of the debtor |
1. Where the recovery plan of a natural person is approved, the composition of property of the natural person subject to sale shall also include the property that he or she has obtained upon entry into legal force of the judgment on declaring bankrupt, but prior to closure of the case or prior to the ensuing of the case provided for by Article 68.
2. Where the financial recovery plan is not approved, the composition of property of the debtor natural person subject to sale (levy) shall not include the property obtained upon entry into legal force of the judgment on declaring the natural person bankrupt, except for the property obtained through inheritance or to be received in case of opening inheritance within the 180 days following payments of the salary of the debtor and other payments equalled thereto, entry into legal force of the judgment on declaring as bankrupt, as well as the property that was obtained as a result of a transaction concluded by the debtor prior to submission of the bankruptcy application.
3. The salary of the debtor and other payments equalled thereto may be charged by taking into account the regulations prescribed by Chapter 6 of the Law “On compulsory enforcement of judicial acts” and the peculiarities of bankruptcy proceedings. This part shall extend to the charges made from the salary and other payments equalled thereto paid prior to the entry into legal force of the judgment on declaring as bankrupt, as well as charges made from the salary of the debtor received and other payments equalled thereto received upon the entry into legal force of the judgment.
3.1. Where the financial recovery plan is not approved or is terminated, the Court shall — at any stage of bankruptcy proceedings, based on the application of the administrator, without convening a court session — render a decision on charging from the part of the salary of the debtor and other payments equalled thereto for levy. The Court shall reject the application of the administrator, where, taking into consideration the size of the claims of the creditors, it finds that the amount of the salary of the debtor and the payments equalled thereto are of such low value that it is not reasonable to levy them in execution, including where:
(1) the salary and the payments equalled thereto do not exceed 150-fold of the minimum salary; or
(2) the claims of creditors will not be satisfied within 48 months through the levy of the salary and the payments equalled thereto;
3.2. The administrator shall, within a three-day period after receiving the decision of the Court provided for by part 3.1 of this Article, forward it to the employer of the debtor. The decision of the Court shall serve as a ground for the employer to transfer the amount subject to levy to the special bankruptcy account of the debtor.
3.3. Rejection by the Court of the application of the administrator shall not be a prohibition for the administrator to apply to the Court again, where the growth in necessary amount of the salary of the debtor and other payments equalled thereto have become known to the administrator prior to the completion of the bankruptcy case. In case of applying again as provided for by this part, the Court shall examine the application as provided for by part 3.1 of this Article.
(Article 95 supplemented by HO-294-N of 12 December 2019, supplemented, amended, edited by HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 96. |
Property of the debtor not subject to realisation |
1. The property of debtor, which, as prescribed by the legislation of the Republic of Armenia, may not be subject to levy execution, shall not be subject to realisation (alienation) for the purpose of satisfying the claims of creditors.
2. Upon the request of the debtor or other persons and upon a court decision, property of the debtor subject to levy execution may not be subjected to levy execution, the value of which cannot have significant influence on satisfaction of the claims of creditors.
3. Where within the meaning of the legislation on compulsory enforcement the only apartment of the debtor is sold at a price exceeding the amount set by the Government, the minimum amount set by the Government and envisaged for selling the only apartment shall be returned to the debtor and shall not be subject to confiscation.
(Article 96 supplemented by HO-294-N of 12 December 2019)
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Article 97. |
Exempting the natural person from liabilities |
Upon entry into legal force of the judgment on closing the bankruptcy case against a natural person by exempting the latter from fulfilment of liabilities, the natural person declared bankrupt shall be exempted from fulfilment of all cash liabilities, with the exception of the following:
(a) liabilities provided for by part 4 of Article 90 of this Law;
(b) liabilities exceeding AMD 100.000 assumed within 90 days preceding submission of the bankruptcy application;
(c) liability for repayment of a student loan;
(d) in the amount equal to the value of hidden property in case the debtor hid the property from the claims of creditors in the course of bankruptcy proceedings.
(Article 97 amended by HO-105-N of 17 June 2016, HO-27-N of 16 January 2024)
(Law HO-27-N of 16 January 2024 has a final part and transitional provisions)
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Article 98. |
Termination of powers of the administrator |
The powers of a bankruptcy administrator shall terminate upon entry into legal force of the judgment on closure of the bankruptcy case of a natural person.
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Article 99. |
Limitation on repeated bankruptcy of a natural person |
1. In the course of five years upon entry into legal force of the judgment on closing the bankruptcy case of a natural person by exempting the latter from fulfilment of liabilities, the same natural person may not submit an application on voluntary bankruptcy in order to be declared bankrupt, and acceptance of an application in case of submission of such an application shall be subject to rejection as prescribed by this Law.
2. (part repealed by HO-105-N of 17 June 2016)
(Article 99 amended by HO-105-N of 17 June 2016)
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Article 100. |
Specifics of bankruptcy of an individual entrepreneur |
1. Creditors of the individual entrepreneur with liabilities not related to entrepreneurial activities in bankruptcy proceedings, as well as creditors with other personal claims shall be entitled to file their claims as prescribed by this Law. Where the natural person declared bankrupt is also an individual entrepreneur, his or her creditors with liabilities connected with the activities of the individual entrepreneur shall be entitled to file their claims as prescribed by this Law.
2. (part repealed by HO-105-N of 17 June 2016)
(Article 100 edited, amended by HO-105-N of 17 June 2016)
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Article 101. |
Consequences of closing a bankruptcy case against a natural person, public register of natural persons declared bankrupt |
(Article repealed by HO-298-N of 29 November 2011)
CHAPTER 12
SIMPLIFIED BANKRUPTCY PROCEDURES
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Article 102. |
Specifics of examination of the case of a debtor under liquidation |
1. Where the value of the estate of the legal person debtor under liquidation is not sufficient for satisfying the claims of creditors, the legal person shall be liquidated as prescribed by this Law.
2. Where the liquidation commission has undertaken all the measures prescribed by law for identifying creditors, the list of creditors submitted by the commission shall serve as a basis for the Court to approve the final list of the claims of creditors.
3. Where the condition provided for by part 1 of this Article is not secured, creditors shall be entitled to file their claims against the debtor under liquidation within one month from the moment of publication of the announcement on declaring the debtor under liquidation bankrupt. In that case, the final list of the claims of creditors shall be approved through the procedure established by this Law.
4. The Liquidation Commission may not submit a financial recovery plan.
5. The powers of the Liquidation Commission shall terminate after the entry into legal force of the judgment on declaring the debtor under liquidation bankrupt. The Liquidation Commission shall be obliged to transfer the whole estate, accounting and other documents to the bankruptcy administrator.
(Article 102 amended by HO-78-N of 19 March 2012)
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Article 103. |
Bankruptcy of an absent debtor |
1. Where the natural person debtor, the individual entrepreneur debtor having actually terminated his or her activity or the executive of the legal person debtor are absent, and it is impossible to identify the place of location (residence) thereof (hereinafter referred to as “absent debtor”), the Court shall, upon own initiative, declare a search against the debtor (executive of the debtor) and his or her property, as well as his or her accounting and other documents.
2. After closure of the search procedure with respect to the absent debtor, where no representative of the debtor is identified, the Court shall notify to the absent debtor at the most recent known address of place of residence or registered office thereof. Sending a notification to such address shall be sufficient for continuing the proceedings.
3. Where the debtor does not dispute his or her bankruptcy in writing within 9 days after the notification has been sent, within a period of three days following the expiry of the time limit envisaged for disputing the bankruptcy, the Court shall, without convening a court session, render a judgment on declaring the absent debtor bankrupt, in case of existence of the elements provided for by part 2 of Article 3 of this Law.
4. In case of identifying the absent debtor and/or the property thereof, upon the motion of the administrator, the Court may render a decision on terminating the simplified bankruptcy procedure and on proceeding to the general bankruptcy procedures provided for by this Law.
(Article 103 amended by HO-294-N of 12 December 2019)
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Article 104. |
Specifics of bankruptcy of legal persons not having undergone re-registration |
Legal persons not having undergone re-registration in compliance with the requirements of the legislation and the term of re-registration whereof has expired at the moment of instituting the case regarding bankruptcy, shall not be subject to financial recovery and must be liquidated as prescribed by Article 70 of this Law, without the conditions in part 1 of Article 70.
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Article 105. |
Closure of a bankruptcy case upon submission by the administrator |
1. In any stage of bankruptcy proceedings, the judge shall, upon submission by the administrator or a creditor, and in case of absence of objections from creditors — without convening a court session, render a judgment on closure of a bankruptcy case, where:
(a) the debtor has no property or no confiscation may be imposed on the property of the debtor in accordance with the procedure prescribed by the legislation of the Republic of Armenia;
(b) it is not possible to find the property of the debtor;
(c) the property of the debtor is of such small value that further implementation of bankruptcy procedures is not reasonable;
(d) expenses to be incurred for finding the property or collecting assets of the debtor do not justify further implementation of bankruptcy procedures.
2. Where the creditor (creditors) makes (make) objections against the closure of the bankruptcy case, the bankruptcy case may proceed at the expense of the objecting creditor (creditors). In such cases, the objecting creditor (creditors) shall be obliged to make a deposit to the special bankruptcy account in the amount specified by a court decision to cover the expenses related to the bankruptcy case.
(Article 105 amended by HO-105-N of 17 June 2016, supplemented by HO-294-N of 12 December 2019 )
CHAPTER 12.1
(Chapter supplemented by HO-89-N of 3 March 2021)
(Law HO-89-N of 3 March 2021 has a transitional provision)
PECULIARITIES OF EXAMINATION OF THE BANKRUPTCY CASE IN CASE OF FORFEITURE OF ILLEGAL ASSETS OF THE DEBTOR
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Article 105.1. |
Applying the law to the relations pertaining to the forfeiture of illegal assets |
1. Restrictions provided for by points 2 and 3 of part 1 of Article 15.5, point 4 of part 2 of Article 39 of this Law, and with regard to securities applied within the scope of the given case — restrictions provided for by point 5 of part 1 of Article 15.5, points 5 and 6 of part 2 of Article 39 of this Law shall not apply to filing of a claim and examination of the case on the basis of the Law of the Republic of Armenia “On civil forfeiture of illegal assets”.
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Article 105.2. |
The status of the competent body in forfeiture of illegal assets during the bankruptcy proceedings |
1. The competent body defined by the Law of the Republic of Armenia “On civil forfeiture of illegal assets” (hereinafter in this Article “competent body”) shall, within a period of fifteen days following receipt of the notification provided for by point “c” of part 1 of Article 19 of this Law, be obliged
— with regard to debtor’s property — to submit to the Court information on judicial acts having entered into force at the time of receipt of the notification and disposing the case on the merits, initiated civil cases, enforcement proceedings and applied securities. The competent body shall — in regard to debtor’s property — submit to the Court the information on judicial acts having entered into force at the time of receipt of the notification and disposing the case on the merits, initiated civil cases, enforcement proceedings and applied securities within a period of fifteen days after the relevant circumstances have emerged.
2. Within the time limits established by part 1 of this Article the competent body shall submit to the Court also information on the claims of creditors which are challenged by the competent body and may not be approved on the basis thereof.
3. After entry into legal force of the judgment on granting the application on the bankruptcy risk and approval of the financial recovery plan or on declaring the debtor bankrupt the competent body may, within the scope of the case on forfeiture of illegal assets, get familiar with materials of the bankruptcy proceedings, including analysis of the financial state of the debtor, as well as request from the administrator information on activities, financial state of the debtor, including inventoried assets and liabilities. The required information shall be submitted to the competent body promptly, but not later than within a period of three days following the receipt of the request of the competent body.
4. Where the examination of the bankruptcy case may affect the process of forfeiture of illegal assets, the competent body may, after receipt of notification provided for by point “c” of part 1 of Article 19 of this Law, on own initiative, file a motion to the Court requesting to recognise the competent body as an interested party. In case the motion is granted by the Court, the competent body shall acquire rights stemming from the status of creditors and debtor with regard to issues provided for by Articles 39.2, 40, 46 and 80 of this Code, including rights to receive the copies of applications, amendments to the claims, interim distribution plans and decisions of the Court, to challenge the submitted applications, to submit objections and positions, to be notified on the time and venue of the court session and to participate in the court session.
CHAPTER 13
TRANSITIONAL AND FINAL PROVISIONS
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Article 106. |
Transitional provisions |
1. (part repealed by HO-13-N of 22 December 2010)
2. Prior to publication of the printed media publishing information on state registration of legal persons, the publications and notifications prescribed by this Law shall be published by means of the printed media selected as prescribed by the Law of the Republic of Armenia “On procurement”, and if there is no such printed media— by means of a printed media with a print run of at least 1 000 copies.
3. The requirement in part 3 of Article 90 of this Law shall apply to debtors involved in cases having closed after the entry into force of this Law.
4. After 1 July 2007, there may be one self-regulatory organisation of administrators having received state registration. In case there is more than one self-regulatory organisation of administrators registered as of 1 July 2007, they shall be subject to merger by virtue of this Law. The founding meeting of merging self-regulatory organisations shall be convened and presided over by the Minister of Justice of the Republic of Armenia who shall conduct the meeting till the election of a chairperson of the self-regulatory organisation.
The founding meeting shall be entitled to commence its work in case at least half of the total number of members to self-regulatory organisations is present.
(Article 106 amended by HO-231-N of 8 December 2010, HO-13-N of 22 December 2010)
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Article 107. |
Entry into force of the Law |
1. This Law shall enter into force on the tenth day following its official promulgation.
2. Bankruptcy proceedings instituted prior to entry into force of this Law in a prescribed manner and pending before the Court shall continue as prescribed by this Law.
3. The rules prescribed by part 1 of Article 9 and point (a) of Article 83 of this Law shall apply to the Republic of Armenia from 1 January 2010.
4. Law of the Republic of Armenia HO-17-N of 17 December 2003 “On insolvency (bankruptcy)” shall be repealed upon entry into force of this Law.
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President |
R. Kocharyan |
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22 January 2007 Yerevan HO-51-N |
Translation published on a joint site 19 February 2026.
| Փոփոխող ակտ | Համապատասխան ինկորպորացիան |
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| Փոփոխող ակտ | Համապատասխան ինկորպորացիան |
|---|