RESOLUTION OF THE PLENUM OF SUPREME ECONOMIC COURT OF THE REPUBLIC OF BELARUS

of December 2, 2005 No. 30

About some questions of practice of application of the legislation regulating questions of economic insolvency (bankruptcy)

For the purpose of ensuring uniform application of the legislation by hearing of cases on economic insolvency (bankruptcy) the Plenum of Supreme Economic Court of the Republic of Belarus, being guided by articles 14-16 of the Law of the Republic of Belarus of December 9, 1998 "About economic courts in the Republic of Belarus" (Vedamasts, Natsyyanalnaga to descent Respubl, to, Belarus, 1999, No. 2, the Art. 32),

DECIDES:

1. Draw the attention of economic courts of the Republic of Belarus (further - economic courts) that put about economic insolvency (bankruptcy) (further - case on bankruptcy) debtors - legal entities and individual entrepreneurs (further - the debtor) are considered by economic courts by the rules determined by the Economic Procedure Code of the Republic of Belarus (further HPK), taking into account the features provided by the Law of the Republic of Belarus of July 18, 2000 "About economic insolvency (bankruptcy)" (The national register of legal acts of the Republic of Belarus, 2000, No. 73, 2/198) (further - the Law), the Presidential decree of the Republic of Belarus of November 12, 2003 No. 508 "About some questions of economic insolvency (bankruptcy)" (The national register of legal acts of the Republic of Belarus, 2003, No. 127, 1/5085) (further the Decree), other legal acts for economic insolvency (bankruptcy).

Other legislation on economic insolvency (bankruptcy), including the procedure for legal proceedings established by HPK concerning cases on bankruptcy, is applied in the part which is not contradicting the Decree, other legal acts of the President of the Republic of Belarus.

2. Economic courts should mean that operation of the legislation on economic insolvency (bankruptcy) extends on legal entities, being the commercial organization, except for the state companies, on the legal entities acting in the form of consumer cooperative or charity or other foundation (Article 61 of the Civil code of the Republic of Belarus (further - group of companies), and also to individual entrepreneurs (Article 24 of group of companies). At the same time it is necessary to consider that the Decree introduces some restrictions on certain legal entities and individual entrepreneurs.

So, by subitem 1.3 of Item 1 of the Decree it is determined that and (or) the having such objects, the legal entities having the objects which are only in property of the state providing maintenance of necessary level of defense capability, functioning of strategically significant industries of economy and (or) other important state requirements, the legislation on economic insolvency (bankruptcy) is not applied to subjects of the natural monopolies, legal entities which are regime and especially sensitive sites, including the Decree provision, except for subitems 1.6-1.8 of Item 1 and subitem 6.1 of Item 6 of the Decree, and also Articles 15, 16 and parts four of article 113 of the Law.

Production on the proceedings initiated against the debtors specified in the paragraph the second this Item is subject to the termination.

Liquidating production if other is not provided by the President of the Republic of Belarus, is not applied to the legal entities and individual entrepreneurs having obligations on delivery of goods, performance of works, rendering services for the state needs and (or) obliged to make transactions according to which obligation fulfillment is provided with property of the Republic of Belarus or its administrative and territorial unit including provided with guarantee of the Republic of Belarus or the Government of the Republic of Belarus, and also the foreign and international defense orders, contracts and external economic transactions in other form having the international nature which accomplishment the Republic of Belarus according to its international obligations shall provide.

Concerning the debtors specified in paragraph four of this Item, liquidating production is not applied and if proceedings are initiated before entry into force of the Decree.

In case financial analysis of the debtors specified in paragraph four of this Item demonstrates impossibility of introduction or continuation of sanitation, and application of liquidating production is not provided by the President of the Republic of Belarus, proceeedings are subject to the termination.

3. Economic courts apply the Decree regulations which became effective on the cases which are in production at the time of entry into force of the relevant standards of the Decree concerning legal proceedings which are made after entry into force of these regulations.

In particular, on the regulations established by the Decree the questions connected using measures of pre-judicial improvement, appointment of managing directors in need of their replacement, by control of activities of the managing director, decision making about recognition economically insolvent with sanitation (the decision on sanitation) or about recognition by the bankrupt with liquidation (the decision on bankruptcy), productions of settlings with creditors on the current payments shall be resolved.

The managing directors appointed on the proceedings on bankruptcy initiated before entry into force of the Decree having the right to perform the functions before completion of proceeedings.

4. Economic courts should mean that the main terms used in the legislation on economic insolvency (bankruptcy) are specified in article 1 of the Law, and also subitem 1.4 of Item 1 of the Decree.

Paragraphs the second and ninth subitem 1.4 of Item 1 the Decree differentiate the concepts "bankruptcy" and "economic insolvency".

So, bankruptcy - the insolvency having or acquiring steady nature, recognized by the decision of economic court on bankruptcy with liquidation of the debtor - the legal entity, the termination of activities of the debtor - the individual entrepreneur (the decision on bankruptcy with liquidation).

Economic insolvency is understood as the insolvency having or acquiring steady nature, recognized by the decision of economic court on economic insolvency with sanitation of the debtor (the decision on sanitation).

In case of removal by economic court concerning the debtor of the decision on sanitation the debtor is recognized economically insolvent and if the debtor is recognized the bankrupt, then in the decision it is specified about opening of liquidating production.

If measures for recovery of solvency of the debtor who is in the procedure of sanitation did not yield positive results and the bases for continuation of the procedure of sanitation are absent, the economic court has the right to refuse approval of the report of the managing director following the results of sanitation and to make the decision on bankruptcy of the debtor with opening of liquidating production.

5. Cases on bankruptcy are separate category of cases of not claim production, and production on such cases is independent type of economic legal proceedings on consideration of the applications about recognition by economically insolvent (bankrupts) of legal entities and individual entrepreneurs.

According to Articles 5, of 18, 19 Laws, Articles 47, of 51, 265 HPK hearing of cases about bankruptcy is performed by economic courts in the location of the debtor irrespective of who is applicant (the resident or the nonresident of the Republic of Belarus).

Supreme Economic Court of the Republic of Belarus, being guided by article 48 HPK, has the right to accept any case on bankruptcy which is in production of economic court to the production.

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