THE LAW OF THE REPUBLIC OF BELARUS

of 30 May 1991

"ON ECONOMIC INSOLVENCY AND BANKRUPTCY" The present Law shall regulate property relations between subjects performing economic and other activities in case of economic insolvency and bankruptcy of any them with a view of maximum possible satisfaction of mutual claims of all parties concerned. The Law shall cover property relations of legal and physical persons carrying on economic activities on the territory of the Republic of Belarus irrespective of their forms of ownership, including economic subjects of other republics or foreign states.

SECTION I. PROPERTY ACCOUNTABILITY OF THE ECONOMIC SUBJECT

Article 1.

All economic subjects shall have full property accountability for their commitments, except in cases stipulated by the legislation. Property accountability of the economic subject shall cover the property belonging to the subject by the right of property or by the right of possession, use and disposal within the limits established by the proprietor or legislative acts of the Republic of Belarus.

Article 2. Property of economic subjects shall include tangible, financial and intangible assets. Tangible assets shall include fixed and current assets. Financial assets shall include: money in cash, bank deposits, checks, traveler's accounting documents, insurance policies, certificates and other insurance documents; depositions made into state or other stocks; áonsumer credit granted by the economic subject to its workers; shares and deposits into property of other economic subjects; other financial assets. Intangible assets shall include: trade marks and signs, names, patents, document packages, know-how, other kings of intellectual property; property rights for the use of resources; other intangible assets.

Article 3. Physical persons shall have property accountability for the commitments of enterprises, of which they are proprietors, within the enterprise ownership capital. Physical persons engaged in entrepreneurial activities without the for a legal person shall be accountable for their commitments with all their property. Property which may not be exacted shall be specified by the legislation of the Republic of Belarus.

Article 4. Persons working by hire shall not have property accountability for the debts of economic subjects. Article 5. Cases of property accountability connected with economic insolvency or bankruptcy of economic subjects shall be considered by courts of justice.

SECTION II.
ECONOMIC INSOLVENCY OF THE ECONOMIC SUBJECT

Article 6. Economic insolvency shall be court-confirmed inability of an economic subject to pay presented financial documents.

Article 7. Proceedings connected with economic insolvency shall be carried out so as to settle relations between the economic subject and its creditors and give the economic subject the right to continue its activities.

Article 8. Grounds for initiating proceedings connected with economic insolvency shall be: inability of the economic subject to pay in due time presented financial documents; excess of the value of debt commitments over the value of property owned by the economic subject; recognition by the economic subject of its economic insolvency.

Article 9. Proceedings connected with economic insolvency shall be initiated: on application of a creditor; on application of the economic subject declaring its economic insolvency.

Article 10. When the economic subject submits an application to a court declaring its economic insolvency, the following shall be required: as regards state-owned enterprises -- a resolution of the proprietor (its authorized body) and the board of the enterprise; as regards enterprises founded on collective property - a resolution of the proprietors who possess at least two thirds of the value of the enterprise's property; as regards enterprises founded on private property -- a resolution of the proprietor; as regards joint ventures and enterprises founded on mixed forms of ownership -- a resolution of the proprietors which possess at least two thirds of the value of the enterprise's property, or bodies authorized by the proprietors. The labour collective shall be informed about a resolution of the economic subject recognize its economic insolvency.

Article 11. The economic subject shall have the right to carry on its economic activities pending decision of a court.

Article 12. When preparing proceeding connected with economic insolvency for hearings, the court shall assign experts to analyze financial and economic activities of the economic subject. Expertise may be carried out by auditors or audit organizations having licences issued by the Audit Chamber under the Council of Ministers of the Republic of Belarus, as well as by legal or physical persons entitled to carry it out by the parties as mutually agreed. In the absence of agreement by the parties, the expert shall be appointed by a c ourt. The expertise shall include: an analysis of the fiscal status of the economic subject; an examination of the grounds for creditors' claims; establishment of reasons of economic insolvency of the economic subject; presentation to the court of the expertise results, as well as of a plan for settling relations between the economic subject and its creditors.

Article 13. A plan for settling of relations between the economic subject and its creditors may include the following measures: a sequence for meeting claims; deferment up to one year of the claim meeting time; finding out of urgent claim and a sequence for their meeting; proportional meeting of claims; partial selling of property owned by the economic subject; reorganization of the economic subject other measures.

Article 14. In case when proceedings of economic insolvency are initiated on application of the economic subject itself, the subject may be vested with additional rights by a court. In particular, an economic subject may be given the right to submit to a court its own plan for the settlement of its relations with creditors and other economic subjects interested in the proceedings; obtain a loan or financial aid from a special economic risk fund, if available; be given a deferment for the fulfillment of confirmed liabilities for a period of up to three years.

Article 15. Having heard the proceedings connected with economic insolvency of an economic subject, a court shall be entitled to: decline claims of creditors; recognize claims of creditors as grounded, recognize economic insolvency of an economic subject, but, at the same time, defer the fulfillment of all or separate confirmed liabilities if the economic insolvency has been brought about by objective reasons and is of temporary nature, as well as recognize as invalid, or terminate, or defer the fulfill ment of, those economic agreements which have brought about economic insolvency of the economic subject; recognize claims of creditors as grounded, recognize economic insolvency of an economic subject, initiate proceedings of bankruptcy. Objective reasons may be: natural calamities; decision of a court to recognize a concluded deal as invalid; alteration by the State of economic methods used to regulate economic activities of an economic subject; other reasons recognized by a court.

Article 16. At any stage of proceedings connected with economic insolvency a defendant may furnish a security specified by the court. In this case proceedings shall be suspended for a period of up to one year.

Article 17. In case when a plan used to regulate relations between an economic subject and creditors includes selling of a part of its property, then the selling shall be effected by the debtor under supervision of a person authorized by the

Article 18. In case when creditors' claims to an economic subject have been declined, the court shall determine the amount of compensation to be paid by the creditors to the defendant as moral and material damage.

Article 19. On demand of creditors, the court may review -- within a time period established by the legislation -- its decision in connection with newly revealed circumstances.

Article 20. Proceedings connected with economic insolvency shall be considered as completed, if a debtor is not any more in the state of insolvency or if bankruptcy proceedings are initiated.

SECTION III.
BANKRUPTCY OF THE ECONOMIC SUBJECT

Article 21. Bankruptcy shall be complete insolvency of the economic subject as judged by a court.

Article 22. The objective of proceedings connected with a bankruptcy shall be maximum possible satisfaction of creditors' claims, liquidation of insolvent economic subject, declaration of an economic subject to be free from debts.

Article 23. Grounds for initiating of bankruptcy proceedings shall be: a declaration of an economic subject of its bankruptcy; a court decision on initiating of bankruptcy proceedings; a declaration of a creditor submitted on expiration of the time period set by a court for the settlement of relations between creditors and the economic subject.

Article 24. When an economic subject declares its bankruptcy, the following shall be required: for state-owned enterprises -- a decision of the owner (or a body authorized by the owner) and the board of the enterprise; for enterprises based on collective ownership -- a decision of owners (proprietors) which own at least two thirds of the value of the enterprise's property; for enterprises based on private ownership -- a decision of the owner (proprietor); for joint ventures and enterprises based on mixed forms of ownership -- a decision of owners (proprietors) which own at least two thirds of the value of the enterprise's property, or of bodies authorized by the owners. A decision of the economic subject to declare its bankruptcy shall be made known to the labour collective.

Article 25. Upon initiation of bankruptcy proceedings, a court shall publish, at the expense of the applicant, an announcement on the forthcoming case hearing in official publications of the Government of the Republic of Belarus and in local The announcement shall include: the name and address or the court; the name and address of the economic subject; grounds for initiation of proceedings; a reference to the creditors and parties concerned and the time period for them to make their claims; other important circumstances of the case.

Article 26. Claims of creditors shall be accepted within the time period established by the court. Claims submitted on expiration of the specified time period shall be satisfied by a property of the enterprise left after meeting the claims s in time.

Article 27. On initiation of bankruptcy proceedings, a court may assign -- on recommendation of creditors or on its own initiative -- an authorized person to perform functions of control over, and administration of, the property of the econo subject. The authorized person may be a physical or legal person entitled to perform suck kinds of work.

Article 28. The authorized person shall be entitled to: appoint its accountant and other persons to conduct the case; attract experts; ban or permit production activities of the economic subject; present matter to a court for recognizing invalidity of deals effected by the economic subject during one year preceding the beginning of bankruptcy proceedings or preceding the submission of an application on economic insolvency for the purpose of property concealment or evasion of debt payment, as well as if the economic subject's receipts from a deal were less than the economically justified price of the property, or if the economic subject was insolvent.

Article 29. The economic subject shall be liable to present to the authorized person a complete list of its creditors and debtors showing the amount of debts, a detailed statement of assets and liabilities, a report of the financial status, required information contained in books, bills and other documents.

Article 30. The authorized person shall be liable to present -- within the time period established by the court -- a conclusion on the actual fact of bankruptcy of an economic subject.

Article 31. From the time the economic subject is recognized bankrupt: dividends, taxes and payments shall be suspended; no new claims shall be allowed in relation to the economic subject; terms for repayment of all debts shall be considered as expired; all proceedings related to the bankrupt and connected with the property shall be suspended. All property claims to a bankrupt may be made to bankrupt only within the bankruptcy proceedings.

Article 32. When taking a decision on the recognition of bankruptcy of an economic subject, the court shall form a liquidation commission headed by an authorized person.

Article 33. The liquidation commission shall: inform creditors and parties concerned about the liquidation of a bankrupt enterprise; collect pecuniary resources of a bankrupt enterprise on a single bank account; make a report on property of a bankrupt enterprise, including pledged property; prepare a plan for its liquidation; complete current affairs; effect stage-by-stage liquidation of property of a bankrupt enterprise in the interests of parties concerned; present to creditors, courts, state supervision and tax bodies, other concerned organizations and persons the required information about property of a bankrupt enterprise, and the procedures for the liquidation of its property; prepare a final report on the performance of the liquidation of the bankrupt enterprise and present the report to a court.

Article 34. The liquidation plan shall reflect: the full and objective picture of the financial state of the bankrupt enterprise; terms, conditions, order, sequence and proportion for the satisfaction of creditors' claims; interests of the proprietor of the bankrupt enterprise and interests of the labour collective; a list of property to be sold; method, place and time of property selling; terms and conditions for payment of court expenses, work of experts, members of the liquidation commission, agents and other persons.

Article 35. To protect their interests, creditors shall have the right to act through their representatives. Representatives of creditors shall be entitled to: represent interests of creditors in a court; obtain information about the financial state of the bankrupt enterprise and its property state; control over activities of the authorized person; learn the plan of liquidation of the bankrupt enterprise; appeal against actions of the authorized person or the liquidation commission in a court.

Article 36. The plan of liquidation of the bankrupt enterprise must be agreed with creditors and shall be considered as agreed, if it is supported by creditors which represent at least two thirds of the claim amount. If the liquidation plan agreed and creditors have not presented their own plan of liquidation of the bankrupt enterprise with in the time period established by the court, then the court approve the plan proposed by the liquidation commission. In case when the proceedings were initiated by the economic subject itself, then this economic subject may present its plan of liquidation of the enterprise.

Article 37. On the basis of the liquidation plan adopted the property sale-out and satisfaction of the claims to the debtor are executed in the following order: - capitalization of time payments due from this managing subject as his responsibility for the injure caused or other health damage or for the death of a person; - payments for labour to the members of the labour collective; - payments into the budget and for social insurance and social care; - obligations for property deposits; - obligations for products (goods) to managing subjects, payments for work, services and forfeits; - unsecured obligations on bonds and other securities, issued by the managing subject, and bank obligations; - obligations to shareholders and parties of managing fellowships; - other obligations of the debtor.

Article 38. Sales of a bankrupt's property shall be effected by means of open tenders, the place and time of which shall be announced by the liquidation commission through official publications of the Government of the Republic of Belarus an press not later than ten days before the tenders begin. Property of a debtor may be sols stage by st age, but always openly and according to economically justified prices.

Article 39. Amounts received as a result of sales shall be distributed among creditors according to the plan of liquidation of the bankrupt enterprise. Payments shall be made as property of a debtor is sold. Final payment shall be made after property has been sold and in accordance with the liquidation plan. The fact of the last payment shall be published.

Article 40. Rights of persons who are employed at an enterprise being liquidated shall be regulated by the legislation of the Republic of Belarus.

Article 41 -- deleted.

Article 42. If the liquidation plan envisages a buy-out of the enterprise and repayment of its debts by the labour collective, then sales of property through tenders shall not be effected.

Article 43. The remainder of the property of the managing subject being liquidated, to whom the property belongs upon the right of ownership, utilization and command within the limits determined by the owner or the legislation acts of the Re Belarus, after satisfying the creditors' demands is given to the property owner.

Article 44. Liabilities which have not been met because of shortage of property shall be considered as repaid.

Article 45. On completion of the enterprise liquidation process the liquidation commission shall hand over the final report to the relevant archives for keeping, inform the Ministry of Finance of the Republic of Belarus and the State Committ Republic of Belarus on Statistics and Analysis so that they exclude the enterprise from the State Register and Records of the Republic of Belarus, When an enterprise engaged in foreign economic activities is being liquidated, this information shall be provided also to the State Committee on Foreign Economic Relations of the Republic of Belarus and the Bank for Foreign Economic Affairs of the Republic of Belarus.

Article 46. From the time an enterprise is excluded from the State Register of the Republic of Belarus, it shall be considered as liquidated, the bankruptcy proceedings shall be terminated and the debtor shall be considered free from debts. DECREE OF THE SUPREME SOVIET OF THE REPUBLIC OF BELARUS ON ENTRY INTO FORCE OF THE LAW OF THE REPUBLIC OF BELARUS "ON ECONOMIC INSOLVENCY AND BANKRUPTCY" The Supreme Soviet of the Republic of Belarus decrees the following: 1. The Law of the Republic of Belarus "On Economic Insolvency and Bankruptcy" shall enter into force July 1, 1991. 2. Until the legislation of the Republic of Belarus is made correspondent to the Law of the Republic of Belarus "On Economic Insolvency and Bankruptcy", acts of the current legislation shall apply inasmuch as they do not contradict the given Law. 3. The Law of the Republic of Belarus "On Economic Insolvency and Bankruptcy" shall apply to legal relations arising after the Law enters into force, that is from July 1, 1991. As regards legal relations which arose before July 1, 1991, the Law of the Republic of Belarus "On Economic Insolvency and Bankruptcy" shall apply to those rights and dutie s which will arise after the Law enters into force. 4. The Council of Ministers of the Republic of Belarus shall: work out and approve by July 1, 1991 Regulations on conditions and procedures of activities of experts and authorized persons in cases of economic insolvency or bankruptcy of economic subjects; by October 1991, submit to the Supreme Soviet of the Republic of Belarus propositions on making legislative acts of the Republic of Belarus correspondent to the Law of the Republic of Belarus "On Economic Insolvency and Bankruptcy"; make decrees and orders of the Government of the Republic of Belarus correspondent to the given Law; ensure the review and cancellation by ministries, state committees and department of the Republic of Belarus of their normative acts contradicting the given Law.


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