LAW OF GEORGIA ON REHABILITATION AND THE COLLECTIVE SATISFACTION OF CREDITORS' CLAIMS

Law of Georgia

On Rehabilitation and Collective Satisfaction of Creditors

Article 1. Purpose of the Law🔗

The purpose of this Law is the collective satisfaction of creditors' claims by achieving rehabilitation, and, if it is impossible to achieve rehabilitation, by distributing the funds received from the realisation of the insolvency estate.

Article 2. Principles of Insolvency Proceedings🔗

The principles of insolvency proceedings are:

a) proper management of the activities of the insolvent debtor and of the insolvency estate;

b) rapid and consistent resolution of the financial difficulties of the insolvent debtor;

c) transparency and predictability of the insolvency proceedings process;

d) preservation and increase, as far as possible, of the value of the insolvency estate and the business;

e) promotion of the rehabilitation of the insolvent debtor;

f) equal treatment of creditors with similar rights.

Article 3. Definition of terms🔗

For the purposes of this Law, the terms used herein have the following meanings:

a) Unliquidated claim – a claim that is not liquidated and includes a claim related to compensation for damage caused or breach of the relevant contract or its non-performance, or another claim arising from a civil relationship;

b) Conditional claim – a claim the origin of which depends on a future and unknown event and which includes various obligations, including an obligation related to a guarantee issued in favour of a third person, which depends on performance of the principal obligation;

c) Unmatured (future) claim – a claim whose performance deadline has not arrived by the time the court declares the insolvency application admissible;

d) New creditor claim – a claim that arose after the court declared the insolvency application admissible and issued a ruling on the opening of the rehabilitation or bankruptcy regime;

e) Current regular obligations – obligations arising from an employment, lease, service or other contract concluded in connection with the debtor's main activity and to be performed regularly;

f) Manager – rehabilitation manager and/or bankruptcy manager;

g) Supervisor – a person appointed to supervise the performance of a regulated agreement; in the event of retention of the enterprise's management bodies during the debtor's rehabilitation process, a person appointed to supervise their activities;

h) Secured creditor – a creditor whose claim is secured by mortgage or pledge in accordance with the procedure established by the Civil Code of Georgia;

i) Conversion – transition from the rehabilitation regime to the bankruptcy regime or from the bankruptcy regime to the rehabilitation regime in accordance with the procedure established by this Law, during which the insolvency proceedings continue without interruption in accordance with the rules provided for by the new regime;

j) Centre of main interests – the place where the debtor permanently carries out activity based on its interests and which a third person perceives as such a place;

k) Debtor – the entity provided for by paragraph 1 of Article 4 of this Law;

l) Cost related to the proceedings – an expense incurred by the manager/supervisor, which includes the costs of sending a notice by post, technical support for convening and holding a creditors' meeting, conducting an expert examination, making copies of case materials and other documentation in accordance with the procedure established by this Law, as well as other necessary expenses related to the proceedings;

m) Economic interest – the value of property or its usefulness for the insolvency estate;

n) Insolvency estate – the debtor's property defined by Article 59 of this Law;

o) a dispute directed against the insolvency estate − a dispute concerning the separation of property from the insolvency estate or the award of a sum from the insolvency estate, which is related to the satisfaction of the claims of creditors existing before the commencement of the insolvency proceedings;

p) liquid asset − money or another asset that can be realised within a short time;

q) bankruptcy minimum − the amount of money or another asset that a creditor would presumably receive in the event of the opening of the bankruptcy regime of the debtor;

r) a person related to the debtor:

r.a) a person authorised to manage and/or represent the debtor, its manager, a member of the supervisory body;

r.b) a partner, participant, member, shareholder, or holder of a share who directly or indirectly holds not less than 5 per cent of the debtor's share;

r.c) a relative of a person provided for by subparagraph "r.a" or "r.b" of this article, or another person who, together with the person provided for by subparagraph "r.a" or "r.b" of this article, has a family household over a long period of time;

r.d) persons who, together with the debtor, directly or indirectly participate in an enterprise, if their share in total amounts to not less than 20 per cent or they otherwise jointly control that enterprise;

r.e) a person whose share is directly or indirectly held by the debtor, or which is otherwise controlled by the debtor;

r.f) a partnership in which the debtor participates;

r.g) another person who has special relations with the debtor which influence the actions carried out by that person or by a person represented by it in respect of the debtor;

s) relative − a person provided for by paragraph 2 of Article 31 of the Civil Procedure Code of Georgia;

t) indirect holding of a share − holding of a share by a relative of a person or by a legal entity not less than 20 per cent of the share of which is held by, or which is otherwise controlled by, that person;

u) control − membership of the supervisory board, possession of the authority to manage and/or represent, the direct or indirect right to appoint a person to the said position, ownership of not less than 20 per cent of the total number of voting shares, stocks or participation interests;

v) moratorium − one or more measures provided for by this Law, which are aimed at protecting the insolvency estate in the course of the proceedings and at neutralising factors hindering the achievement of the purpose of this Law;

w) opposing party to a challenge − a person who is obliged, in accordance with Chapter VIII of this Law, to return to the debtor that which it received as a result of the challenged action;

x) a debtor with the status of a special regime − a debtor whose suspension/termination of activity will cause substantial harm to the State interest and/or the public interest and which the court considers to be such a debtor;

y) preferential claims − amounts payable before the court declares the insolvency application admissible, reimbursable for 3 months' wages and vacation expenses (except wages and vacation expenses of the debtor's directors and supervisory board members, as well as their family members), amounts payable due to industrial injury (for each creditor − in an amount not exceeding GEL 1,000);

z) preferential tax claims − amounts of indirect taxes provided for by the Tax Code of Georgia, arising for the corresponding tax period of the last 3 years before the court declares the insolvency application admissible;

aa) non-privileged claim − a creditor's claim, on the satisfaction of which in a non-privileged manner the debtor and the creditor have agreed in advance.

Article 4. Scope of the Law🔗

1. This Law regulates the insolvency of the following subjects:

a) an entrepreneurial entity founded in accordance with the Law of Georgia "On Entrepreneurs", except an individual entrepreneur;

b) a non-entrepreneurial (non-commercial) legal entity provided for by the Civil Code of Georgia, an unregistered union (association), joint activity (partnership), a securitisation fund founded in accordance with the Law of Georgia "On Transformation into Securities" and a subdivision of a special purpose entity for securitisation (a securitisation fund or a securitisation company), except an authorised securitisation fund and subdivisions of an authorised special purpose entity for securitisation;

c) a legal entity and other formation created in accordance with the legislation of a foreign country (regardless of whether or not it has the status of a legal entity) which carries out economic activity and whose centre of main interests is in Georgia.

2. This Law shall not apply to:

a) the insolvency of a natural person;

b) the insolvency of a legal entity of public law;

c) a commercial bank, a non-bank deposit-taking institution, an insurance company, a pension company and other subjects provided for by the legislation of Georgia whose insolvency is also regulated by special legislation.

3. Insolvency proceedings against a person participating in a netting agreement or financial collateral provided for by the Law of Georgia "On Financial Collateral, Netting and Derivatives" shall be conducted taking into account this Law and the special provisions of the Law of Georgia "On Financial Collateral, Netting and Derivatives".

4. Insolvency proceedings against an originator, an original creditor, a non-authorised special purpose entity for securitisation and its subdivision as defined by the Law of Georgia "On Transformation into Securities" shall be conducted taking into account the special provisions established by Articles 18, 20 and 22 of the same Law.

Law of Georgia of 28 June 2023 No. 3348 – website, 19.07.2023.

Law of Georgia of 15 December 2023 No. 3931 - website, 27.12.2023.

Article 5. Creditors' claims🔗

1. A creditor's claim is a debt or a claim for performance of an obligation, which may be expressed in monetary form, the obligation to perform which or the responsibility for performance of which is borne by the debtor at the moment of declaring the insolvency application admissible, and which, without any limitation, includes due claims, unliquidated claims, conditional claims and non-matured (future) claims.

2. A creditor has the right, within 30 days from receipt of the notification on declaring the insolvency application admissible, to apply to the manager/rehabilitation supervisor (if any) and submit to him a creditor's claim, if it differs from the amount of the claim acknowledged by the debtor. This time limit may be restored in accordance with Article 65 of the Civil Procedure Code of Georgia. Any claim submitted after expiry of this time limit shall be considered late.

3. A creditor to whom notification was not sent in accordance with this Law has the right to submit a claim within 30 days from becoming aware of the insolvency proceedings, but no later than 1 year from the issuance of the ruling on declaring the insolvency application admissible and on opening the rehabilitation or bankruptcy regime, except where the limitation period for the claim provided by the Civil Code of Georgia has expired.

4. The manager/rehabilitation supervisor has the right to request additional information and evidence from the creditor in order to verify the amount of the claim and its validity.

5. After expiry of the time limit established by paragraphs 2 and 3 of this Article, submission or increase of a claim is inadmissible. The manager/rehabilitation supervisor shall enter the said claim in the creditors' register in an amount not exceeding that acknowledged by the debtor and which has not become disputed.

6. A legal entity of public law − the Pension Fund of Georgia (hereinafter − the Pension Fund) is not a creditor for the purposes of this Law. In relation to the pension assets in the ownership of a participant as defined by the Law of Georgia "On Funded Pension", the creditor/creditors is/are the respective participant or the participant's heir/heirs. In the case of an application by the rehabilitation manager and/or the bankruptcy manager in accordance with this Law, the Pension Fund of Georgia is obliged to provide to the said person/persons the information existing in the electronic system on the pension contributions made by the respective employer, as well as the information obtained as a result of comparison with the data received from the legal entity of public law within the governance sphere of the Ministry of Finance of Georgia − the Revenue Service, in accordance with the Law of Georgia "On Funded Pension".

Law of Georgia of 1 November 2023 No. 3607 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4315 – website, 12.07.2024.

Article 6. Grounds for initiating insolvency proceedings🔗

1. The ground for initiating insolvency proceedings is the debtor's insolvency or anticipated insolvency. Insolvency proceedings are initiated by filing an insolvency application with the court requesting the opening of the rehabilitation or bankruptcy regime.

2. Insolvency proceedings may be conducted:

a) under the rehabilitation regime;

b) under the bankruptcy regime.

3. The initiation of insolvency proceedings implies the emergence of the corresponding ground for subjecting the entities provided for by this Law to the regulation established by the same Law.

Article 7. Concept of insolvency and presumption of insolvency🔗

1. A debtor is insolvent if it is unable to cover its due obligations.

2. Anticipated insolvency exists if there is reasonable ground to presume that the debtor will become insolvent.

3. For the purposes of filing an insolvency application with the court, until proven otherwise, the debtor shall be presumed insolvent if one of the following circumstances exists:

a) the sum of the debtor's total obligations, including future and contingent obligations, exceeds the sum of total assets, except when there is a high probability that the debtor will be able to continue its activities, as a result of which the excess of obligations over assets will be eliminated. For the purposes of establishing the existence of insolvency, the debtor's obligations also include future and contingent obligations, except for loans granted to the debtor by a partner;

b) it is presumed that the debtor will be unable to cover its due obligations within the following 30 days, because the sum of its due obligations exceeds the sum of total liquid assets by not less than 20 percent (liquidity deficit), except when there is a high probability that the debtor will be able to eliminate the liquidity deficit in whole or substantially in whole within a reasonably short period of time;

c) the debtor is entered, or was entered within 12 months before the filing of the application, in the register of debtors;

d) the debtor has suspended its activities;

e) in respect of the debtor, for not less than 30 days before the filing of the application, a measure to secure the enforcement of a tax debt is in effect;

f) for the performance of the obligations of the debtor or a third party, a process of realization of the debtor's property has been initiated under a security agreement or another ground provided for by the legislation of Georgia, the continuation of which poses a threat to the satisfaction of the claims of other creditors.

Article 8. Court jurisdiction and procedural norms🔗

1. Special court jurisdiction is established with respect to the insolvency cases provided for by this Law.

2. The insolvency cases provided for by this Law shall be considered by the Tbilisi and Kutaisi City Courts.

3. For the purposes of considering the insolvency cases provided for by this Law, the jurisdiction of the Tbilisi City Court covers Eastern Georgia, and the jurisdiction of the Kutaisi City Court – Western Georgia.

4. The court shall consider an insolvency case according to the legal address of the debtor, and in the absence of the debtor's legal address in Georgia − according to the centre of its main interests.

5. When considering an insolvency case provided for by this Law, the procedural norms established by this same Law shall apply.

6. With respect to insolvency proceedings, the Civil Procedure Code of Georgia shall apply only if this Law does not contain a special norm regulating the relevant issue and the application of the Civil Procedure Code of Georgia does not contradict the purpose and principles of this Law.

Article 9. Filing a private complaint with the court🔗

1. In the course of insolvency proceedings, a decision taken by a judge in the form of a ruling may be appealed only by way of a private complaint.

2. The right to file a private complaint with the court shall be held by a party to the insolvency proceedings against whom the ruling has been issued, as well as by the person directly affected by that ruling.

3. A private complaint shall be filed with the court that issued the ruling, in written form.

4. A private complaint may be filed within 5 days of the publication of the ruling, unless another time limit is established by this Law. Extension of this time limit shall not be permitted.

5. If a person entitled to file a private complaint was present at the announcement of the ruling, the time limit for filing a private complaint shall begin from the moment of its announcement.

6. Filing a private complaint shall not suspend the performance of the procedural action provided for by the appealed ruling. The court is entitled to suspend the performance of the procedural action provided for by the appealed ruling.

7. If the court considers the private complaint admissible and substantiated, it shall grant it. Otherwise, the private complaint, together with the case materials, shall be sent to the higher court within 5 days of its receipt.

8. The higher court shall consider the private complaint and take a decision within 14 days.

9. The ruling of the higher court on the private complaint shall be final and shall not be subject to appeal.

Article 10. Hearing of a dispute under the general claim procedure🔗

1. A civil or administrative dispute related to the reclamation of a thing from the insolvency estate, or in which the debtor is the claimant and which is related to the insolvency estate, shall be heard expeditiously in accordance with the procedure established by this Article and the relevant procedural legislation.

2. The operation of paragraph 1 of this Article shall not extend to a dispute which is heard by arbitration in accordance with the procedure established by the Law of Georgia "On Arbitration".

3. A dispute provided for by paragraph 1 of this Article, initiated after the commencement of insolvency proceedings, shall be heard by the court hearing the insolvency case.

4. The judge hearing the insolvency case shall, within 5 days from the publication of the ruling on declaring the insolvency application admissible and on opening the rehabilitation or bankruptcy regime, send the relevant notification to the judge hearing the dispute provided for by paragraph 1 of this Article. The judge hearing the said dispute shall be obliged to complete the hearing of the case within 20 days from the receipt of the notification.

5. A judgment rendered by the court of first instance on a dispute provided for by paragraph 1 of this Article may be appealed to the appellate court within 5 days from its delivery to the party. The appellate court shall be obliged to consider the issue of admitting the appeal to proceedings within 5 days, and in the event of its admission to proceedings — to complete the hearing of the case within 20 days.

6. A judgment rendered by the appellate court on a dispute provided for by paragraph 1 of this Article may be appealed to the court of cassation instance within 5 days from its delivery to the party. The court of cassation instance shall be obliged to consider the issue of admitting the appeal to proceedings within 5 days, and in the event of its admission to proceedings — to complete the hearing of the case within 20 days.

Article 11. Insolvency Practitioner🔗

1. Participation of an insolvency practitioner in insolvency proceedings conducted in accordance with this Law is mandatory.

2. An insolvency practitioner is a natural person or legal entity having appropriate qualifications and experience and representing professional circles. It shall be independent, impartial and conscientious.

3. For the purposes of this Law, only an insolvency practitioner may be appointed to the position of manager/rehabilitation supervisor/regulated agreement supervisor. The Minister of Justice of Georgia (hereinafter – the Minister of Justice) is authorized by order to determine the categories of insolvency practitioners that will be admitted to different types of insolvency cases, taking into account their complexity.

4. The authorization of an insolvency practitioner shall be carried out by a Legal Entity of Public Law operating in the area of governance of the Ministry of Justice of Georgia – the National Bureau of Enforcement (hereinafter – the National Bureau of Enforcement). The rules and conditions for carrying out the authorization of an insolvency practitioner, as well as the rules for maintaining the unified register of insolvency practitioners, shall be approved by the Minister of Justice.

5. In an insolvency case, the manager/rehabilitation supervisor/regulated agreement supervisor shall be selected automatically, through the electronic system for their selection, in compliance with the principle of random distribution, except for cases provided for by this Law.

6. The rules for the automatic selection, through the electronic system, of the manager/rehabilitation supervisor/regulated agreement supervisor in an insolvency case shall be approved by the Minister of Justice.

7. In the event of a temporary disruption of the electronic system for selecting the manager/rehabilitation supervisor/regulated agreement supervisor, it is permissible to select the manager/rehabilitation supervisor/regulated agreement supervisor without the electronic system for their selection, in accordance with the order of sequence, which implies selection according to the order of submission of the relevant application to the court and selection of the manager/rehabilitation supervisor/regulated agreement supervisor in the unified register of insolvency practitioners in alphabetical order.

8. The court is authorized to determine the need to appoint more than one manager if this follows from the complexity of the case and the debtor's annual turnover exceeds GEL 100 million.

9. The insolvency practitioner shall, in the manner prescribed by law, insure his/her professional liability in order to compensate for possible material damage caused to the debtor, a creditor or another interested person.

Article 12. Recusal/Self-recusal of an Insolvency Practitioner🔗

1. An insolvency practitioner may not be appointed as a manager/rehabilitation supervisor/supervisor of a regulated agreement in the course of insolvency proceedings if he or she:

a) is himself or herself a party to this case or is bound to any party to the said case by common rights or obligations;

b) is a relative of a party to this case or of that party's representative;

c) is personally, directly or indirectly interested in the outcome of this case, or there is another circumstance that makes his or her impartiality doubtful.

2. If there is a ground for recusal provided for by paragraph 1 of this Article, any interested person participating in the insolvency proceedings shall have the right to apply to the court by motion for the recusal of the insolvency practitioner.

3. If there is a ground for recusal provided for by paragraph 1 of this Article, the insolvency practitioner shall be obliged to declare self-recusal and indicate the relevant ground.

4. The court shall consider the issue of recusal/self-recusal of an insolvency practitioner within 5 working days from the submission of the relevant application. If the application is granted, it shall select and appoint a new insolvency practitioner in accordance with the procedure established by paragraph 5 of Article 11 of this Law.

Article 13. Rules for convening and holding a creditors' meeting🔗

1. At any stage of insolvency proceedings, the court shall prepare the creditors' meeting and shall provide organizational support for its holding.

2. The decision of the creditors' meeting and the minutes of the creditors' meeting shall be posted in the electronic system provided for by Article 19 of this Law no later than the second working day.

3. Any secured creditor or unsecured creditor who, within the period established by law, submits his/her claims against the debtor through the electronic system, shall be entitled to attend the creditors' meeting. The debtor shall also have the right to attend the creditors' meeting. A creditor and the debtor attending the creditors' meeting shall have the right to express comments and opinions and ask questions in connection with the matter under consideration.

4. The right to convene a creditors' meeting through the electronic system shall be held by a creditor holding at least 10 percent of the total number of creditors' votes, as well as by the debtor, the manager, and the rehabilitation supervisor. The court shall post in the electronic system a notice on the convening of the creditors' meeting and its agenda no later than the second working day after receipt of the request to convene this meeting. The creditors' meeting shall be held no later than 10 days after submission of the said request. Any person provided for by this paragraph who has the authority to convene a creditors' meeting may, no later than 5 days before the holding of the said meeting, request the addition of an issue to its agenda. After expiry of this period or directly during the creditors' meeting, the addition of an issue to its agenda shall be permissible only with the consent of the debtor, the manager, the rehabilitation supervisor, and not less than 75 percent of the creditors.

5. Any creditor whose claim has been recognized shall have the right to vote at the creditors' meeting, unless otherwise provided by this Law.

6. The creditors' meeting shall be competent (capable of taking decisions) if a creditor holding more than 50 percent of the total number of creditors' votes attends it or is represented at it.

7. The creditors' meeting shall take decisions by a simple majority of the votes of the creditors attending and represented at it, unless otherwise provided by this Law.

8. The number of creditors' votes shall be determined according to the following rule: a claim of 1 GEL – 1 vote (rounding shall be down).

9. If the creditors' meeting did not take place or it is incapable of taking decisions (is not competent) or it failed to take a decision, a repeated creditors' meeting shall be convened through the electronic system, within 7 days, with the same agenda. This meeting shall be capable of taking decisions, regardless of the number of votes of the creditors attending and represented at it.

10. If the repeated creditors' meeting did not take place or it failed to take a decision, the creditors' meeting may be convened again on the same issue in accordance with paragraph 4 of this Article.

11. Convening a creditors' meeting is not necessary if a creditor holding more than 50 percent of the votes agrees to the matter under consideration through the electronic system. Such consent shall be equivalent to the minutes of the creditors' meeting and shall be considered a decision of the creditors' meeting. If the creditors' meeting adopts a decision on a matter for which greater support is required, this rule shall apply provided that the corresponding greater support exists.

12. In the case of adoption of a decision of the creditors' meeting without holding it, the said decision shall enter into force from the moment when it is placed in the electronic system or otherwise becomes available to the manager, the rehabilitation supervisor, the debtor and any other creditor.

13. The duration of a creditors' meeting shall not exceed 3 working days.

14. If the number of persons (creditors) with identical claims (including holders of securities) exceeds 20, upon the court's request they shall be obliged to appoint a representative who shall be authorised to participate in the creditors' meeting and to exercise their other powers on behalf of the represented creditors. By providing information to the said representative, such information shall be deemed to have been provided to each represented creditor. Representative powers shall be executed in writing. If the creditors fail to agree on a candidate for the representative within 10 days from the delivery to them of the court's corresponding request, the court shall be entitled to appoint a representative itself from among the same creditors. The number of representatives determined by this paragraph shall not exceed 3.

15. If, in the case provided for by paragraph 14 of this Article, the identical claims arise from public debt securities issued in accordance with the Law of Georgia "On the Securities Market", the holders of the said securities shall appoint a representative in the manner established by the terms of issue, of which they shall notify the court. If the creditors fail to appoint a representative within 10 days from the delivery to them of the court's corresponding request, or the terms of issue do not provide for representation on the matter determined by this Law, the court shall be entitled to appoint a representative itself from among the same creditors.

Article 14. Procedure for sending a notification to a creditor🔗

1. A notification on the recognition of an insolvency application as admissible and on the opening of the rehabilitation or bankruptcy regime shall be sent to the creditor in the manner established by the Civil Procedure Code of Georgia. The ruling on the recognition of an insolvency application as admissible and on the opening of the rehabilitation or bankruptcy regime shall, in addition to the electronic system of insolvency proceedings (hereinafter – the electronic system), also be published on the website of the "Legislative Herald of Georgia".

2. For other notifications provided for by this Law, it is sufficient to place the information in the electronic system, unless otherwise determined by this Law.

Article 15. Obligation to Disclose Information🔗

1. On the debtor's website (if any), in a business document used in insolvency proceedings, which is issued by the debtor or the administrator/rehabilitation supervisor/supervisor of a regulated agreement or on his behalf, it shall be indicated that the debtor is in the relevant insolvency regime, and also information shall be indicated about the identity of the administrator/rehabilitation supervisor/supervisor of a regulated agreement (his identification data and contact information).

2. The operation of paragraph 1 of this Article shall not extend to a standard document of a form established by the State, in which the debtor also has no authority to make changes.

Article 16. Obligation of the Debtor to Submit an Application on the Commencement of Insolvency Proceedings🔗

1. Persons authorized to manage and represent the entity provided for by paragraph 1 of Article 4 of this Law shall, no later than 3 weeks from the moment of occurrence of insolvency, submit to the court an application on the commencement of insolvency proceedings. Failure to fulfill this obligation entails the imposition of criminal liability.

2. For the purposes of this Article, the moment of occurrence of insolvency shall be considered the moment when the relevant persons knew or should have known that, under paragraph 1 of Article 7 of this Law, the debtor is insolvent.

3. A change made in accordance with this Law, which concerns the registered data on persons authorized to manage and represent the debtor or the restrictions imposed by this Law on management and representation, requires registration in the Register of Entrepreneurs and Non-Entrepreneurial (Non-Commercial) Legal Entities in accordance with the procedure established by the legislation of Georgia, which shall be ensured immediately, upon the occurrence of the grounds for making such change, by the administrator/rehabilitation supervisor.

Article 17. Confidentiality Obligation and Conflict of Interest🔗

1. The administrator, rehabilitation supervisor, supervisor of a regulated agreement, member of the creditors' committee, creditor, expert shall be obliged not to transfer to a third party or use for personal purposes information related to the financial condition of the enterprise, classified as a commercial secret, or other information, which became known to him in the course of the insolvency process, except in the case where the party for whose interests the confidentiality obligation acts consents to the disclosure of this information or the disclosure of the said information is provided for by the legislation of Georgia.

2. The confidentiality obligation shall not prevent the entity provided for by paragraph 1 of this Article from using the relevant information in carrying out actions necessary for the examination, management or sale of property.

Article 18. Liability of the Applicant🔗

1. If, after the court has issued a ruling on declaring the insolvency application admissible and opening the rehabilitation or bankruptcy regime, it is revealed that the debtor was not insolvent from the outset or was not a person facing imminent insolvency, the court shall impose on the applicant the costs of the proceedings, except for the cost of the insolvency practitioner's services, the reimbursement of which shall be imposed on the debtor.

2. In the case provided for by paragraph 1 of this Article, the court is entitled, upon the request of an interested person, to impose on the applicant compensation for damage caused to the debtor and/or creditor by the filing of the relevant application, if one of the following circumstances is revealed:

a) the application was filed as a result of the intentional provision of incorrect information or concealment of information;

b) the purpose of the debtor's filing of the application is to obstruct the creditor in the exercise of individual actions against him;

c) the purpose of the filing of the application is abuse of the moratorium or otherwise violation of the rights of the creditor, debtor or a third party.

3. In the case provided for by paragraph 2 of this Article, the amount of damage shall be determined by the court hearing the insolvency case.

Article 19. Electronic System🔗

1. The electronic system shall ensure the performance, by electronic means, of actions provided for by law in the course of insolvency proceedings, including the filing of the relevant application, the publication of information and exchange between persons provided for by this Law.

2. All rulings issued by the court in the course of insolvency proceedings shall be placed in the electronic system no later than the second working day after their issuance. The decisions of the creditors' meeting, the creditors' committee, the administrator, the rehabilitation supervisor and the supervisor of the regulated agreement, and the documentation related thereto, shall also be placed in the electronic system. The placement of the said information/documentation in the electronic system shall be considered its official publication. In cases directly provided for by this Law, as well as by a court judgment, the ruling/judgment may additionally be published on the website of the Legislative Herald of Georgia or in print media, including in media of national and/or international importance.

3. Information/documentation sent through the electronic system shall be considered delivered to the relevant addressee/received by the relevant addressee from the moment of its placement in the electronic system.

Article 20. Provision of information to investigative bodies about the abuse of the provisions of this Law🔗

A person performing the relevant functions provided for by this Law shall be obliged to provide the investigative bodies with information that has become known to that person, namely, information that any former or current head of the debtor or a person authorised to represent the debtor, or another person, is carrying out an act related to the application of the moratorium or an act directly or indirectly related to the application of this Law, for which criminal liability is provided.

Article 21. Essence of a regulated agreement🔗

1. A regulated agreement is an agreement reached, in accordance with the procedure established by this Law, between a debtor that is insolvent or facing imminent insolvency and the creditors, within the framework of which each creditor receives at least as much as it would receive in the event of the debtor's bankruptcy, except where the creditor agrees to a different satisfaction within the framework of the regulated agreement.

2. The purpose of a regulated agreement is the preservation of the debtor as a going concern, which excludes its liquidation within the framework of this agreement.

3. A regulated agreement may be concluded and performed only with the participation of the supervisor of the regulated agreement.

4. For the period of the negotiations conducted for the conclusion of a regulated agreement, the moratorium provided for by Article 55 of this Law shall apply for a term of not more than 2 months. By decision of the creditors' meeting, this term may be extended by not more than 2 months. The debtor is entitled, in accordance with the rules established by this Chapter, not to apply the moratorium.

5. The fulfilment of the following conditions is not mandatory for the conclusion of a regulated agreement:

a) observance of the principle of proportionality in the group of unsecured creditors in the distribution of property benefit/advantage in respect of an unsecured creditor that supported the regulated agreement;

b) determination of creditors' claims and drawing up of the register of creditors in accordance with the procedure established by this Law. For the purposes of a regulated agreement, the debtor and the supervisor of the regulated agreement are entitled, in accordance with the procedure established by this Chapter, to draw up the register of creditors. In this case, creditors shall be given a full opportunity to submit their claims.

6. In calculating the bankruptcy minimum and determining the best interest of creditors, the net present value method shall be applied.

7. As a result of the performance of the regulated agreement, all obligations of the debtor that existed at the time of approval of the regulated agreement and that were fully or partially covered by the regulated agreement shall be deemed fully and finally performed.

8. The failure to reach a regulated agreement grants the supervisor of the regulated agreement, as well as a creditor, the right to file with the court an application for the initiation of rehabilitation or bankruptcy proceedings against the debtor.

9. For the purposes of this Chapter, in order to exercise the powers related to a regulated agreement by a person entitled to manage and represent the debtor in accordance with the Law of Georgia on Entrepreneurs, the consent of the majority of the partners of the debtor is mandatory, and in the case provided for by the Law of Georgia on Entrepreneurs or the charter — the consent of the partners holding a qualified majority of the votes of the partners of the debtor. The said consent shall include authorisation for the adoption of all significant decisions.

Article 22. Person entitled to make an offer on the conclusion of a regulated agreement🔗

The debtor is entitled to offer the creditors the conclusion of a regulated agreement in accordance with the procedure established by this Law.

Article 23. Proposal on the conclusion of a regulated agreement🔗

1. The proposal on the conclusion of a regulated agreement shall contain:

a) a report on the debtor's activities;

b) the terms of the proposal;

c) an indication regarding the application of the moratorium;

d) the proposer's opinion as to why the conclusion of the regulated agreement is desirable and expedient;

e) the proposer's position as to why it is expected that the creditors will support the regulated agreement.

2. The obligation to submit the information provided for by paragraph 1 of this Article shall be borne by the proposer within the scope of the information known to him/her.

3. The proposal shall also contain the date and the proposer's signature.

Article 24. Supervisor of the regulated agreement🔗

The supervisor of the regulated agreement is an insolvency practitioner.

Article 25. Debtor's activity report🔗

1. The debtor's activity report shall contain the debtor's identification data and complete information on the debtor's assets, obligations, guarantees and suretyship.

2. Information on the debtor's assets shall include a description of the debtor's assets, indicating their book and market values, including:

a) a description of property encumbered by a security measure and of secured claims, the time of origin, basis and scope of the security measure;

b) assets that are to be excluded from the regulated agreement (if any);

c) the debtor's claims against third parties, including claims against a person related to the debtor;

d) a description of property whose owner is not the debtor before the conclusion of the regulated agreement, but which is covered by this agreement. The description of this property shall include information on the owner of the property and on the conditions upon compliance with which this property will be available within the framework of the regulated agreement.

3. The debtor's obligations shall include various information, including:

a) a list of creditors indicating each creditor's claim, name and address, in the following order:

a.a) secured creditors − the description and scope of the secured claim and the object of security shall be indicated;

a.b) preferential creditors;

a.c) unsecured creditors;

a.d) creditors of a person related to the debtor;

b) the name and address of the debtor's partners, indicating the respective share and contribution of each partner (including unpaid contribution). In the case of a joint-stock company, it is sufficient to submit the information provided for by this subparagraph in respect of not less than two thirds of the debtor's partners.

4. Information on guarantees and suretyship shall include various information, including:

a) information on whether any guarantee has been issued in connection with the debtor's debt, and a description and scope of the guarantee (if any);

b) an indication as to which of the guarantors/sureties is a person related to the debtor.

5. The debtor's activity report shall also contain information on possible grounds for challenge that would exist in the case of the enterprise rehabilitation or bankruptcy regime.

6. The debtor's activity report shall be prepared as of not earlier than 2 weeks before the date of the proposal. It shall be confirmed by a statement by which the offeror confirms that the submitted information, to the extent known to the offeror, is complete and true.

7. For the purposes of drawing up the relevant report, the supervisor of the regulated agreement is entitled to accept the debtor's activity report for a longer period than that established by paragraph 6 of this Article, but not earlier than 2 months before the date of the proposal.

Article 26. Terms of the Proposal🔗

1. The proposal shall include the following terms:

a) means of satisfying, modifying, deferring or otherwise settling the obligations of the enterprise;

b) measures to be taken in respect of the creditor who is a person related to the debtor;

c) for the purposes of the regulated agreement, information on whether the availability of new funds, credit and/or guarantees is proposed, with a description of the relevant terms, including with or without the condition of applying a security measure over the debtor’s property;

d) detailed information on the new sources of financing proposed to the debtor and the ways of satisfying the obligations arising from these sources;

e) ways and methods of disposing of the funds raised and/or allocated for the purposes of the regulated agreement before their distribution to creditors;

f) ways of conducting the debtor’s activities and business during the term of the regulated agreement;

g) measures to be taken in respect of the claim of the person for whom the regulated agreement became binding in accordance with subparagraph "b" of paragraph 1 of Article 39 of this Law;

h) the term of the regulated agreement and the rules for its extension.

2. The terms of the proposal may also include possible security guarantees that the debtor offers to creditors in connection with the risk and cost of carrying out a challenge, in the event that the debtor enters the rehabilitation or bankruptcy regime.

3. The terms of the proposal may also include other matters that the proposer considers necessary in order for creditors to be able to make an informed decision on the proposed regulated agreement.

Article 27. Sending of a Notification to the Supervisor of the Regulated Agreement on the Proposal🔗

The debtor shall send the supervisor of the regulated agreement a written notification about the intention to make a proposal and the terms of the proposal. A proposal with the content defined by Article 23 of this Law shall be attached to it.

Article 28. Consent of the Supervisor of the Regulated Agreement🔗

The supervisor of the regulated agreement shall, within 5 days from receipt of the proposal, send the debtor consent to examine the proposal and draw up the relevant report. If this period expires without a response, the said consent shall be deemed to have been given.

Article 29. Report of the supervisor of the regulated agreement🔗

1. Within 30 calendar days from receipt of the notification provided for by Article 27 of this Law, the supervisor of the regulated agreement shall submit a report to the debtor:

a) on whether the regulated agreement has a reasonable prospect of approval and implementation;

b) on whether the debtor has sufficient funds to continue operations during the term of the moratorium.

2. The supervisor of the regulated agreement is entitled to:

a) rely on the information submitted to him/her, except where there are grounds to doubt it;

b) request in writing any other information about the debtor's activities.

3. A creditors' meeting shall be convened to consider the report of the supervisor of the regulated agreement (the date, time and place of the creditors' meeting shall be indicated).

4. The report of the supervisor of the regulated agreement shall also contain the date and the signature of the supervisor of the regulated agreement.

Article 30. Replacement of the supervisor of the regulated agreement🔗

The debtor is entitled to replace the supervisor of the regulated agreement − select a new supervisor of the regulated agreement in accordance with the procedure established by Article 11 of this Law, if:

a) the supervisor of the regulated agreement has not submitted to the debtor the report provided for by Article 29 of this Law in accordance with the procedure established by this Chapter;

b) the supervisor of the regulated agreement has died;

c) the supervisor of the regulated agreement no longer meets the requirements of this Law or a circumstance has arisen that would be grounds for refusing to enter him/her in the unified register of insolvency practitioners;

d) there are grounds for recusal provided for by this Law.

Article 31. Submission to the Court of the Positive Report of the Supervisor of the Regulated Agreement and Moratorium🔗

1. For the purposes of this Article, the report of the supervisor of the regulated agreement is positive if, in the assessment of the supervisor of the regulated agreement, the following circumstances exist:

a) the regulated agreement has a reasonable prospect of approval and implementation;

b) the debtor has sufficient funds to continue its activities during the term of the moratorium.

2. Within 5 days of receiving the positive report of the supervisor of the regulated agreement, the debtor shall submit to the court, together with the said report of the supervisor of the regulated agreement, a proposal on the conclusion of the regulated agreement.

3. The debtor is entitled to apply the moratorium provided for by this Article only in the case of receiving a positive report of the supervisor of the regulated agreement, in accordance with Article 55 of this Law.

4. Within 24 hours of receiving the proposal on the conclusion of the regulated agreement and the positive report of the supervisor of the regulated agreement, the court shall determine the compliance of the proposal on the conclusion of the regulated agreement and the positive report of the supervisor of the regulated agreement with the formal requirements established by this Law and shall issue an appropriate ruling.

5. In the ruling by which the compliance of the proposal on the conclusion of the regulated agreement and the positive report of the supervisor of the regulated agreement with the formal requirements established by this Law is determined, the court shall indicate that, within 2 months from the issuance of this ruling, a moratorium shall apply to the debtor, if this is provided for by the said proposal. The court may extend the term of the moratorium if the creditors' meeting extends the negotiation period for concluding the regulated agreement.

6. Upon the issuance of a ruling on the application of the regulated agreement, the consideration of an application for rehabilitation or bankruptcy shall be suspended.

Article 32. Publicity in the Process Related to the Regulated Agreement

Upon the entry into force of the moratorium, the powers provided for by Article 74 of this Law shall be vested in the supervisor of the regulated agreement.

Article 33. Restriction of disclosure of the debtor's activity report🔗

1. The supervisor of the regulated agreement, the debtor, or an interested creditor is entitled to submit an application to the court requesting full or partial non-disclosure of the debtor's activity report to all creditors or to a part of them, if, in the applicant's opinion, its disclosure would hinder the achievement of the purpose of the regulated agreement or would cause unjustified damage to the debtor or the applicant creditor.

2. If the court considers the relevant application substantiated, it shall issue a ruling on the full or partial concealment of the debtor's activity report from all creditors or a part of them.

3. The debtor is entitled to submit the application provided for by this article also at the time of submission to the court of the proposal on concluding the regulated agreement and the positive report of the supervisor of the regulated agreement. In this case, the written consent of the supervisor of the regulated agreement shall be attached to the said application.

Article 34. Convening of the creditors' meeting🔗

1. The draft regulated agreement shall be published no later than the last day of the moratorium period, and in the case of implementation without a moratorium of the proposal on concluding the regulated agreement – no later than 2 months from the issuance by the court of the relevant ruling.

2. The supervisor of the regulated agreement shall send a notice to attend the creditors' meeting for approval of the regulated agreement to all creditors known to him and to the debtor no later than 14 days before the date of this meeting. The said notice shall contain:

a) a copy of the proposal on concluding the regulated agreement;

b) a copy of the report of the supervisor of the regulated agreement, except for the case provided for by paragraph 2 of Article 33 of this Law;

c) a copy of the relevant ruling of the court;

d) the explanation of the supervisor of the regulated agreement on the creditor's proposal to make an amendment to the regulated agreement and on his, as the supervisor of the regulated agreement, consideration of this amendment;

e) the explanation of the supervisor of the regulated agreement on the creditor's claim and his voting right, in accordance with the requirements of this Law;

f) the date, time and place of the meeting.

3. The supervisor of the regulated agreement shall explain to the relevant creditor his status in the notice to attend the creditors' meeting.

Article 35. Decision of the creditors' meeting🔗

1. The chairperson of the creditors' meeting is the supervisor of the regulated agreement.

2. The creditors' meeting shall decide whether it approves the proposed regulated agreement:

a) with amendments proposed by the creditors;

b) with amendments proposed by the debtor;

c) with amendments proposed by the creditors and the debtor;

d) without amendment.

3. An amendment to be made to the regulated agreement may not contain a condition whereby the regulated agreement loses the essence defined by Article 21 of this Law.

4. The proposal of an amendment to be made to the regulated agreement by the creditors shall be made in the manner specified in the invitation to attend the creditors' meeting by the supervisor of the regulated agreement, while the amendment proposed by the debtor shall be submitted to the supervisor of the regulated agreement no later than 7 days before the date of this meeting. In the case of approval of the regulated agreement with amendments proposed by the creditors, the regulated agreement shall enter into force with the debtor's consent.

5. The right to vote at the creditors' meeting is determined in accordance with paragraph 6 of Article 82 of this Law.

6. For the approval of the regulated agreement or of an amendment to be made thereto, the support of not less than 75 per cent of those creditors present at the creditors' meeting who have the right to vote and who are not persons related to the debtor shall be necessary.

7. It shall be inadmissible for the creditors' meeting to approve a regulated agreement or an amendment to be made thereto:

a) which affects the right of a secured creditor to enforce the security, except where the secured creditor consents to such agreement/amendment;

b) under which an unsecured creditor is satisfied in priority compared to a preferential creditor, except where the preferential creditor consents to such agreement/amendment;

c) under which a preferential creditor is satisfied in violation of the principle of proportionality in relation to another preferential creditor, except where the relevant preferential creditor consents to such agreement/amendment.

8. After the conclusion of the creditors' meeting, the supervisor of the regulated agreement shall submit to the court a report on the decision/results of the creditors' meeting together with a copy of the minutes of the creditors' meeting.

Article 36. Legal consequences of approval of a regulated agreement🔗

1. Performance of a regulated agreement approved by the creditors’ meeting in accordance with Article 35 of this Law shall be binding on the creditors, except for a creditor who was not invited because the supervisor of the regulated agreement did not know or could not have known of the existence of that creditor.

2. Unless otherwise provided by the regulated agreement, a creditor shall not be entitled to file a claim against the debtor, or to initiate or continue proceedings in respect of a claim that is regulated by the regulated agreement, except where the regulated agreement is breached.

3. Upon approval of the regulated agreement, the person authorised to manage and represent the debtor shall ensure that the supervisor of the regulated agreement has unrestricted access to the assets intended for the regulated agreement, in accordance with that agreement, in order to exercise supervision over its performance.

4. If, upon expiry of the term of the regulated agreement, except in the case of its early termination, the debtor has not paid to a creditor for whom the regulated agreement became binding in accordance with subparagraph „b“ of paragraph 1 of Article 39 of this Law the amount provided for by the regulated agreement, the debtor shall be obliged to pay the said amount notwithstanding the expiry of the term of the regulated agreement.

Article 37. Creditor to whom an invitation to attend the creditors’ meeting was not sent🔗

1. If, after approval of the regulated agreement, a creditor is identified whose existence was not known to the supervisor of the regulated agreement and who would have had the right to vote if invited to the creditors’ meeting, the supervisor of the regulated agreement shall immediately notify that creditor that it has the right to submit its claim in writing as at the date of approval of the regulated agreement.

2. If, within 1 month from the notification provided for by paragraph 1 of this Article, the creditor does not submit its claim in writing, the supervisor of the regulated agreement shall be entitled to remove it from the circle of creditors who are parties to the regulated agreement.

Article 38. Amendment of an approved regulated agreement🔗

1. The grounds for amending an approved regulated agreement are:

a) such violation by the debtor of the regulated agreement that is not remedied within 1 month from the sending of a warning by the supervisor of the regulated agreement to the debtor;

b) presentation by the debtor of obligations in the debtor’s activity report in a reduced form, as well as identification of such a creditor who was not indicated in the debtor’s activity report and, accordingly, was not invited to the creditors’ meeting.

2. If there is a ground for amending the regulated agreement, the supervisor of the regulated agreement shall, in accordance with the procedure established by paragraph 2 of Article 34 of this Law, convene a creditors’ meeting and shall propose to the creditors an amendment to the regulated agreement. If the proposal to amend the regulated agreement is not agreed or an amendment cannot be made thereto, the supervisor of the regulated agreement shall propose to the creditors termination of the regulated agreement and filing of an insolvency application with the court with respect to the debtor.

3. If there is a ground for amending the regulated agreement, creditors holding at least 10 percent of the claims provided for by the regulated agreement shall have the right to demand that the supervisor of the regulated agreement convene a creditors’ meeting.

4. An amendment to be made to the regulated agreement shall be approved subject to compliance with the conditions established by Article 35 of this Law.

5. The supervisor of the regulated agreement shall be entitled, without complying with the rules established for amending the regulated agreement, to adopt a decision:

a) on a one-time extension of the term of the regulated agreement by not more than 6 months, on the basis of a notification sent to the creditors 7 days before the expiry of the term of the regulated agreement;

b) on reduction, in favour of the debtor, of the monthly total payments provided for by the regulated agreement by not more than 10 percent and/or on their rescheduling.

Article 39. Appeal against a decision of the creditors' meeting🔗

1. The following shall have the right to appeal against a decision of the creditors' meeting:

a) a creditor having the right to attend and vote at the creditors' meeting held to consider a proposal on the conclusion of a regulated agreement;

b) a creditor having the right to vote who was not sent a notice to attend the creditors' meeting.

2. A person provided for by paragraph 1 of this article may appeal against a decision of the creditors' meeting if the following grounds exist:

a) the decision on approval of the regulated agreement causes unjustified harm to a creditor or partner of the debtor;

b) the creditors' meeting was held with a material violation of the rules. For the purposes of this article, failure to send a creditor a notice to attend the creditors' meeting shall not be considered a material violation of the rules, except when the voting right of the said creditor could have influenced the decision of the creditors' meeting.

3. The time limit for appealing a regulated agreement in accordance with the procedure established by this article is 30 days, which shall be counted from:

a) the day of submission to the court, in accordance with paragraph 8 of Article 35 of this Law, of the report on the decision/results of the creditors' meeting;

b) in the case of a person provided for by subparagraph „b“ of paragraph 1 of this article – from the day of receipt by him/her of information on the holding of the creditors' meeting.

4. The court shall consider a complaint submitted in accordance with the procedure established by this article within 30 days. If the court considers the complaint justified, it is entitled to annul the decision of the creditors' meeting on approval of the regulated agreement.

Article 40. Performance of the regulated agreement🔗

1. Supervision and coordination of the performance of the regulated agreement shall be carried out by the supervisor of the regulated agreement.

2. The debtor, a creditor or another interested person is entitled, taking into account the requirements of this article, to appeal to the court against an action or decision of the supervisor of the regulated agreement. The court is entitled to leave in force, annul or amend the action or decision of the supervisor of the regulated agreement.

3. The supervisor of the regulated agreement is entitled to apply to the court:

a) with a request to adopt a decision on issues raised on the basis of the regulated agreement and in connection with its performance;

b) with an application on the opening of a rehabilitation or bankruptcy regime with respect to the debtor, if the conditions provided for by the regulated agreement are not fulfilled, and/or, proceeding from the interests of the body of creditors, the opening of a rehabilitation or bankruptcy regime is desirable.

4. In the event of the regulated agreement not being reached or not being successfully performed, it is inadmissible to leave the debtor in management.

Article 41. Information inconsistent with the truth/false information🔗

1. A person authorized to manage and represent the debtor shall be subject to criminal liability if, in order to obtain the creditors' consent to the approval of the regulated agreement, he/she:

a) fails to submit to the relevant person, for the exercise of the powers provided for by this Law, information on the debtor's property, obligations, financial condition and activities, as well as on disputes pending in court, or submits the said information deliberately late or in falsified form;

b) acts in bad faith, which causes significant damage.

2. In the presence of the circumstance provided for by paragraph 1 of this article, the person authorized to manage and represent the debtor shall be subject to criminal liability also if the regulated agreement is not approved.

Article 42. Termination of the regulated agreement🔗

1. The grounds for termination of the regulated agreement are:

a) performance of the regulated agreement within the relevant term;

b) breach of the regulated agreement, except where the breach is insignificant or an amendment has been made to the regulated agreement in accordance with the procedure established by Article 38 of this Law.

2. No later than 30 days after the termination of the regulated agreement on any relevant ground, the supervisor of the regulated agreement shall be obliged to send a notice on the termination of the regulated agreement to all creditors of the debtor to whom the regulated agreement applied.

3. The supervisor of the regulated agreement shall be obliged to indicate in the notice provided for by paragraph 2 of this article the ground for termination of the regulated agreement.

4. The notice provided for by paragraph 2 of this article shall be accompanied by a report prepared by the supervisor of the regulated agreement, which contains:

a) information on the payments made and the amounts received (receipts) in connection with the regulated agreement;

b) an explanation regarding the non-performance of the conditions provided for by the regulated agreement.

5. The supervisor of the regulated agreement shall be obliged, within 30 days from the sending to the creditors of the notice provided for by paragraph 2 of this article, to submit to the court copies of the said notice and the report attached thereto.

6. After the submission to the court of copies of the notice provided for by paragraph 2 of this article sent to the creditors and the report attached thereto, the powers of the supervisor of the regulated agreement shall terminate.

7. For the purposes of subparagraph „b“ of paragraph 1 of this article, a breach is insignificant when the unperformed obligation does not exceed 5 percent of the total obligations provided for by the regulated agreement, and the delay in its performance does not exceed 10 calendar days.

Article 43. Persons Entitled to File an Insolvency Application with the Court🔗

1. The right to file an insolvency application with the court shall be vested in:

a) the debtor – through a person authorised to manage and represent the enterprise;

b) the creditor;

c) the supervisor of the regulated agreement;

d) the rehabilitation manager – by a conversion request, where the rehabilitation regime has been opened in respect of the debtor;

e) the bankruptcy manager – by a conversion request, where the bankruptcy regime has been opened in respect of the debtor.

2. An insolvency application shall contain the applicant's request for the opening of the rehabilitation or bankruptcy regime.

Article 44. Application on insolvency with a request to open rehabilitation proceedings🔗

1. In the application on insolvency, by which the applicant requests the opening of rehabilitation proceedings, the following shall be indicated:

a) the name of the court to which the application on insolvency is submitted;

b) the surname, name and address of the applicant, and if the applicant is a legal entity – the name, legal address and identification number (if any);

c) the status of the applicant, in accordance with paragraph 1 of Article 43 of this Law;

d) the name, surname and address of the applicant's representative, if the application on insolvency is submitted by the applicant's representative;

e) the name, legal address and identification number of the debtor (if any);

f) a general description of the debtor's activity;

g) arguments confirming that the debtor is insolvent or is a person facing imminent insolvency;

h) the applicant's request to open rehabilitation proceedings and the substantiation that there is a reasonable probability of achieving the purpose of rehabilitation;

i) the request to leave the debtor in possession or to appoint a rehabilitation manager;

j) the request to apply the additional measure of the moratorium provided for by paragraph 1 of Article 57 of this Law (if any).

2. The following information shall be attached to the application on insolvency (to the extent known to the applicant):

a) information on the debtor's financial condition, which includes its assets and obligations, including future and contingent obligations;

b) information on the debtor's property encumbered with a security measure and on the identity of the secured creditors (names, designations, addresses, identification numbers);

c) information on the progress of other insolvency proceedings against the debtor;

d) an extract from the register of entrepreneurs and non-entrepreneurial (non-commercial) legal entities concerning the debtor;

e) any information which, in the applicant's opinion, is important for adopting a decision on the opening of rehabilitation proceedings.

3. If the application on insolvency is submitted to the court by the debtor, it shall, in addition to the information provided for by paragraphs 1 and 2 of this Article, also submit:

a) a complete list of its creditors (indicating names, designations, personal numbers, identification data) and information on existing obligations;

b) a description of tax obligations and information on their amount, including the unadjusted amount;

c) information on the enterprise's balance sheet, a description of current income (including the type and amount of monthly net income) and expenses;

d) information on its receivables;

e) information on contracts and current regular obligations;

f) information on ongoing court disputes;

g) information on the number of employees at the enterprise as of the moment of filing this application;

h) if a draft rehabilitation plan prepared in advance exists as of the moment of filing this application – a copy of this draft, and, where possible, also information on the reasonably expected changes to be made in revenues and expenses during the 12 months following the moment of filing the said application;

i) a rehabilitation plan pre-agreed with creditors (if it exists). It shall be accompanied by the prior consent obtained by the debtor from the majority of creditors as established by this Law.

4. If an application on insolvency is filed with the court by a creditor, it shall, in addition to the information provided for by paragraphs 1 and 2 of this article, also submit:

a) substantiation of its own interest in the rehabilitation regime;

b) a document confirming the delivery to the debtor of the application on insolvency and the accompanying information/documents.

5. If an application on insolvency is filed with the court by the supervisor of a regulated agreement, it shall, in addition to the information provided for by paragraphs 1 and 2 of this article, also submit a copy of the regulated agreement.

6. If an application on insolvency is filed with the court by a bankruptcy manager, it shall, in addition to the information provided for by paragraphs 1 and 2 of this article, also submit:

a) detailed information on the current bankruptcy regime;

b) identification data and contact information of the bankruptcy manager;

c) a copy of the court ruling on the appointment of the bankruptcy manager.

7. The application on insolvency and the accompanying information shall be confirmed by a declaration of compliance with the truth, according to which the information submitted by the applicant, to the extent known to the applicant, is accurate and exhaustive.

Article 45. Application on insolvency with a request to open the bankruptcy regime🔗

1. In the application on insolvency, by which the applicant requests the opening of the bankruptcy regime, the following shall be indicated:

a) the name of the court to which the application on insolvency is submitted;

b) the surname, name and address of the applicant, and if the applicant is a legal entity – the name, legal address and identification number (if any);

c) the status of the applicant, in accordance with paragraph 1 of Article 43 of this Law;

d) the name, surname and address of the applicant's representative, if the application on insolvency is submitted by the applicant's representative;

e) the name, legal address and identification number of the debtor (if any);

f) arguments confirming that the debtor is insolvent or is a person facing imminent insolvency;

g) justification that the opening of the bankruptcy regime clearly does not contradict the interests of the creditors;

h) a request for the application of an additional measure of the moratorium provided for by Article 57 of this Law (if any).

2. The following information shall be attached to the application on insolvency (insofar as it is known to the applicant at the moment of submission of this application):

a) information on the financial condition of the debtor, which includes its assets and liabilities, including future and contingent liabilities;

b) information on the debtor's property encumbered with a security measure and on the identity of the secured creditors (names, designations, addresses, identification numbers);

c) information on the progress of other insolvency proceedings against the debtor;

d) an extract from the register of entrepreneurs and non-entrepreneurial (non-commercial) legal entities concerning the debtor;

e) any information which, in the applicant's opinion, is important for making a decision on the opening of the bankruptcy regime.

3. If the application on insolvency is submitted to the court by the debtor, it shall, in addition to the information provided for by paragraphs 1 and 2 of this Article, also submit:

a) a complete list of its creditors (names, designations, personal numbers, identification data shall be indicated) and information on existing obligations;

b) a description of tax obligations and information on their amount, including unspecified amount;

c) information on the enterprise's balance sheet, a description of current income (including the type and amount of monthly net income) and expenses;

d) information on the number of employees in the enterprise at the moment of submission of this application;

e) a complete list of the insolvency estate. Book values shall be indicated, including information on the debtor's bank accounts and the funds therein;

f) information on its receivables;

g) information on contracts and current regular obligations;

h) information on ongoing court disputes;

i) in the event of expected insolvency − the consent of its partners and a document confirming the sending of a notification, at the moment of filing the application on insolvency with a request to open bankruptcy proceedings, to the 3 creditors holding the largest claims;

j) an indication that it wishes to be declared bankrupt/no longer has an interest in the business.

4. If an application on insolvency is filed with the court by a creditor, it shall, in addition to the information provided for by paragraphs 1 and 2 of this Article, also submit:

a) substantiation of its own interest in the bankruptcy proceedings;

b) a document confirming the delivery to the debtor of the application on insolvency and the attached information/documents.

5. The consent of the debtor's partners provided for by subparagraph "i" of paragraph 3 of this Article requires the support of not less than 75 per cent of them, unless otherwise determined by its charter.

6. If the debtor, in the application on insolvency by which it requests the opening of bankruptcy proceedings, substantiates that in the event of the opening of bankruptcy proceedings it will not be able, with its property, to secure the covering of procedural expenses, the said application, in addition to the information provided for by this Article, must contain:

a) an indication that in the event of the opening of bankruptcy proceedings the debtor will not be able, with its property, to secure the covering of procedural expenses;

b) evidence confirming the existence of the circumstance provided for by subparagraph "a" of this paragraph.

7. If the application on insolvency is filed with the court by a rehabilitation manager, it shall, in addition to the information provided for by paragraphs 1 and 2 of this Article, also submit:

a) detailed information on the current rehabilitation proceedings;

b) the identification data and contact information of the rehabilitation manager;

c) a copy of the court ruling on the appointment of the rehabilitation manager;

d) information on the reason for considering the filing of the bankruptcy application appropriate to the existing situation.

8. The application on insolvency and the attached information must be confirmed by a declaration of compliance with the truth, according to which the information submitted by the applicant, to the extent known to the applicant, is accurate and exhaustive.

Article 46. Registration of an insolvency application filed by a creditor🔗

1. In the event of the filing of an insolvency application by a creditor, the court chancellery shall ensure the registration of this application and shall hand over to the creditor a message (copies of the said application and the attached documents) for delivery to the debtor.

2. The creditor shall be obliged, within 1 month from the receipt of the court message defined by paragraph 1 of this article, to ensure its delivery to the debtor by post, by court courier or by another method provided by agreement of the parties, or its sending by electronic mail in accordance with the rules established by Articles 70–78 of the Civil Procedure Code of Georgia. A court message sent by electronic mail shall be considered delivered where the debtor confirms the receipt of the said message by electronic means.

3. The creditor shall be obliged to submit to the court the document confirming the delivery of the court message to the debtor before the expiry of the period established by paragraph 2 of this article.

4. The debtor shall be obliged, within 7 days from the receipt of the court message, to submit to the court its own opinion on its insolvency or expected insolvency and on the opening of the rehabilitation or bankruptcy regime.

Article 47. Recognition of an insolvency application as admissible🔗

1. If the insolvency application is filed by the debtor, the court shall decide the issue of recognizing this application as admissible within 7 days of its filing, and if the said application is filed by a creditor — within 10 days of the submission to the court of the document confirming delivery to the debtor of the court communication. The court may extend this time limit once, on its own initiative, by a reasoned ruling. The extended time limit shall not exceed the time limit established for consideration of the issue of recognizing the insolvency application as admissible.

2. The court shall consider the issue of recognizing the insolvency application as admissible at an oral hearing. If the factual circumstances of the case are not disputed, the court is entitled to consider this issue without an oral hearing.

3. The court shall commence the procedure for selecting a person to be appointed as manager/supervisor immediately upon receipt of the application on the commencement of insolvency proceedings. The person selected through this procedure shall be immediately notified of his/her expected appointment as manager/supervisor, in order to ensure, as promptly as possible, the study and proper preparation of the circumstances affecting the performance of his/her functions by the manager/supervisor. Information on the person selected for appointment as manager/supervisor shall be immediately published in the electronic system.

4. If the insolvency application meets the formal requirements established by this Law and the debtor is insolvent or is a person facing imminent insolvency, the court shall issue a ruling on recognizing the insolvency application as admissible and on opening the rehabilitation or bankruptcy regime.

5. The court shall publish the ruling on recognizing the insolvency application as admissible and on opening the rehabilitation or bankruptcy regime in the manner established by this Law, as well as on the website of the "Legislative Herald of Georgia". The said ruling shall indicate the identity of the manager/supervisor selected automatically, by means of the electronic system, in compliance with the principle of random distribution, in accordance with paragraph 5 of Article 11 of this Law.

6. The meeting of creditors included in the initial register of creditors, which also consists of those creditors whose information is obtained in the case, is entitled, before the court issues a ruling on recognizing the insolvency application as admissible and on opening the rehabilitation or bankruptcy regime, to elect another manager/supervisor by a 2/3 majority of the creditors present at the meeting of creditors and having the right to vote, and to notify the court thereof. In this case, the court shall, by the ruling on recognizing the insolvency application as admissible and on opening the rehabilitation or bankruptcy regime, appoint as manager/supervisor the person elected by the meeting of creditors.

Article 48. Refusal to declare an insolvency application admissible🔗

1. If the insolvency application does not meet the formal requirements established by this Law, the court shall issue a ruling on the existence of a defect and shall give the applicant 5 working days to correct the relevant defect. If the applicant corrects the said defect within this period and the court establishes the debtor's insolvency or impending insolvency, the court shall issue a ruling on declaring the insolvency application admissible and on opening the rehabilitation or bankruptcy regime. Otherwise, the court shall issue a ruling on refusal to declare the insolvency application admissible.

2. If the court considers that the debtor is not an insolvent person or a person facing impending insolvency, it shall issue a ruling on refusal to declare the insolvency application admissible.

3. Within 3 months from the issuance of a ruling on refusal to declare the insolvency application admissible, it shall be inadmissible for the same applicant to initiate an insolvency case against the same subject on the basis of substantially the same circumstances. This restriction shall not apply to the case provided for by paragraph 6 of this Article.

4. If the debtor requests the opening of the bankruptcy regime by an insolvency application and the court establishes that, in the event of opening the bankruptcy regime, the debtor will not be able to cover procedural expenses with its property, it shall issue a ruling on refusal to declare the insolvency application admissible. In this ruling the court shall indicate that the debtor will be declared bankrupt with the cancellation of its registration if, within 1 month from the publication of the said ruling, a creditor does not file an insolvency application with the court against the same debtor.

5. For the purpose of providing information to creditors, no later than the third day from the issuance of the ruling provided for by paragraph 4 of this Article, the court shall publish in the electronic system and on the website of the "Legislative Herald of Georgia":

a) the information provided for by the said ruling and subject to public dissemination;

b) information to the effect that the creditor has the right, within 1 month from the publication of the relevant information, to file an insolvency application with the court against the same debtor for the purpose of commencing insolvency proceedings and satisfying its claim from the debtor's property.

6. If, within 1 month from the publication of the information provided for by paragraph 5 of this Article, a creditor does not file an insolvency application with the court, the court shall declare the debtor bankrupt, which shall be the ground for cancellation of the debtor's registration.

7. In the case provided for by paragraph 6 of this Article, the debtor's property (if any) shall, before the cancellation of its registration, be distributed among the debtor's partners in proportion to their shares, unless otherwise determined by an agreement existing among the debtor's partners.

8. The court shall take all measures to fully and comprehensively examine the circumstances of the case, including in order to identify and confirm the absence of a risk of abuse of one's own right by any party, as well as the existence of the prerequisites for achieving the purpose of this Law in the said case in the most effective manner. If, as a result of the consideration of the case, the court has doubts that the reference provided for by paragraph 7 of Article 44 or paragraph 8 of Article 45 of this Law is unfounded, or that the submitted evidence is not genuine or sufficient to substantiate the said reference, it shall issue a ruling on refusal to declare the insolvency application admissible.

Article 49. Consequences of declaring an insolvency application admissible🔗

1. By the ruling of the court on declaring the insolvency application admissible and on opening the rehabilitation or bankruptcy regime, a moratorium shall enter into force in accordance with the procedure established by this Law.

2. From the moment of declaring admissible an insolvency application filed with the court requesting the opening of the rehabilitation regime, it shall be prohibited to file with the court an insolvency application requesting the opening of the bankruptcy regime.

3. From the moment of declaring admissible an insolvency application filed with the court requesting the opening of the rehabilitation regime and of the opening of the rehabilitation regime, the consideration of an application filed with the court requesting the opening of the bankruptcy regime and declared admissible shall be suspended until a ruling is issued on the matter of rehabilitation.

4. The court shall immediately send the ruling on declaring the insolvency application admissible and on opening the rehabilitation or bankruptcy regime to the National Bureau of Enforcement and to the legal entity of public law operating in the field of governance of the Ministry of Justice of Georgia − the National Agency of Public Registry (hereinafter − the National Agency of Public Registry) for the enforcement, within their own competence, of the restrictions imposed within the scope of the moratorium.

5. The National Agency of Public Registry shall immediately provide to the National Bank of Georgia information on the issuance of a ruling on declaring admissible an insolvency application and on opening the rehabilitation or bankruptcy regime in respect of an enterprise participating in a payment system operating in accordance with the Law of Georgia “On Payment Systems and Payment Services”.

Article 50. Appointment of Manager🔗

1. The court, immediately upon declaring the insolvency application admissible, notifies the insolvency practitioner selected in accordance with the procedure established by this Law about the opening of the rehabilitation or bankruptcy regime and his/her appointment as manager. This notice must be accompanied by the ruling on declaring the insolvency application admissible and on opening the rehabilitation or bankruptcy regime.

2. In exercising his/her powers, the manager:

a) gives consent to such a transaction:

a.a) which is concluded for a term of more than 2 months;

a.b) which goes beyond the debtor's ordinary commercial activity;

a.c) the value of which (in the case of several transactions − their total value) exceeds 30 percent of the debtor's turnover for the previous year;

b) prepares accounts in accordance with the requirements of this Law and submits them to the court;

c) examines creditors' claims for the purpose of preparing accounts;

d) in accordance with Article 52 of this Law, prepares the initial register of creditors;

e) is entitled to request from the debtor information about his/her property, obligations, financial condition and activities, as well as about disputes pending in court as of the moment of declaring the insolvency application admissible. The manager also has the right to request from the debtor clarification of the information submitted by him/her;

f) searches for and inventories the property registered in the debtor's name;

g) immediately notifies creditors about declaring the insolvency application admissible and about the obligation to use the electronic system in insolvency proceedings. This notice must also state that creditors have the right to submit their claims and opinions within the period established by this Law;

h) applies to the court with a motion for the full transfer to him/her of the right to manage the debtor, if the enterprise does not have a person authorized to manage and represent it, including a person authorized to manage and represent it who has retained the right to manage the enterprise in accordance with the procedure established by this Law:

h.a) does not cooperate with him/her in accordance with the requirements of this Law;

h.b) clearly causes damage to the insolvency estate;

h.c) evades the performance of duties provided for by the legislation of Georgia or its charter, including no longer manages the enterprise.

3. If the manager refuses to give consent to the conclusion of a transaction provided for by paragraph 2 of this Article, the debtor has the right to submit an application to the court requesting permission. The court issues a ruling on granting the debtor's application or on refusing to grant the debtor's application.

Article 51. Sending of notification on declaring an insolvency application admissible🔗

1. The manager shall send to all known and presumed creditors a notification on declaring the insolvency application admissible. It shall contain:

a) information on declaring the debtor's insolvency application admissible;

b) information on the amount of the obligation acknowledged by the debtor towards the creditor, as well as an indication of the creditor's right to contest the said amount within the time limit established by this Law;

c) information on the opening of the rehabilitation or bankruptcy regime, with the possibility to submit their opinions within the time limit established by this Law.

2. A creditor is entitled, within 15 days from the publication on the website of the Legislative Herald of Georgia of the ruling on declaring the insolvency application admissible and on the opening of the rehabilitation or bankruptcy regime, to submit to the court its opinion on the debtor's insolvency or anticipated insolvency and on the opening of the regime requested by the insolvency application. For this purpose, the creditor has the right to additionally request from the insolvency practitioner financial or other information related to the debtor. The manager shall publish this information in the electronic system, except for information classified as a commercial secret.

Article 52. Drawing up of the creditors' register🔗

1. The creditors' claims shall be verified and the creditors' register shall be drawn up by the manager/supervisor within 60 days from the recognition of the insolvency application as admissible, on the basis of information received from the creditors and the debtor and/or information obtained by him/her.

2. Only those creditor claims which the manager/supervisor considers substantiated shall be entered in the creditors' register. Those claims whose enforcement is ongoing under the procedure established by the Law of Georgia "On Enforcement Proceedings" shall be reflected automatically in the creditors' register, except where the creditor refuses to have his/her claim entered in the said register.

3. The manager/supervisor shall not be entitled to recognise a penalty and overdue interest if their total amount exceeds 10 per cent of the principal debt. The creditor shall be entitled to apply to the court with a claim requesting that the unrecognised overdue interest and penalty be imposed on the debtor and entered in the register. The court shall be entitled to be guided by Article 420 of the Civil Code of Georgia, except where the amount of the penalty is confirmed by a judgment of a court or private arbitration that has entered into legal force and/or where, at the time of the initiation of the insolvency proceedings in respect of the claim, enforcement was ongoing against the debtor.

4. A claim shall be reflected in the creditors' register in the national currency.

5. The provisions of this Article concerning the verification of creditors' claims and the drawing up of the creditors' register shall not apply to a creditor who, in accordance with the Law of Georgia "On Financial Collateral, Netting and Derivatives", enjoys the right of netting or the right of close-out netting. The special provisions of the Law of Georgia "On Financial Collateral, Netting and Derivatives" shall apply to a netting agreement.

Article 53. Data of the creditors' register🔗

The creditors' register shall be drawn up in accordance with the groups of creditors provided for by this Law. It shall contain at least the following information (data):

a) the surname, name and address of the creditor, and if the creditor is a legal entity – its name, legal address and identification number (if any);

b) the creditor's e-mail address;

c) the amount of the creditor's claim as at the date of entry in the creditors' register. The principal amount, interest and penalty of this claim shall be indicated separately;

d) the amount of the debt;

e) in the case of a secured claim − an indication of what part of this claim is secured. The creditor's secured claim and unsecured claim shall be recognised separately.

Article 54. Approval of the Register of Creditors🔗

1. The manager/supervisor shall publish in the electronic system the register of creditors compiled in accordance with Articles 52 and 53 of this Law. A creditor or a debtor shall have the right to appeal the register of creditors compiled by the manager/supervisor to the court within 10 days of its publication. The court shall consider the claim expeditiously, in accordance with the procedure established by Article 10 of this Law.

2. The court shall issue a judgment in the form of a ruling. In accordance with this ruling, the manager/supervisor shall make a change in the register of creditors and shall publish it in accordance with the procedure established by this Law.

3. Approval of the register of creditors does not preclude the manager/supervisor from making a change therein in accordance with the procedure established by this Law. This change shall be reflected in the register of creditors and published in accordance with the procedure established by this Law.

Article 55. Moratorium measures🔗

Immediately upon the court's recognition of the insolvency application as admissible and the issuance of a ruling on opening the rehabilitation or bankruptcy regime, the following moratorium measures shall automatically enter into force:

a) enforcement measures in progress against the debtor's property shall be suspended, and the initiation of new enforcement measures shall not be permitted;

b) the enforcement security measures provided for by the Tax Code of Georgia (tax lien, mortgage and others) and the accrual/payment of fines and penalties shall be suspended, and the initiation of new enforcement security measures shall not be permitted, except for measures carried out for the purpose of covering tax arrears arising after the court's recognition of the insolvency application as admissible and the issuance of a ruling on opening the rehabilitation or bankruptcy regime in accordance with the procedure established by the Tax Code of Georgia;

c) the satisfaction of a creditor from the subject of security shall be suspended and shall not be permitted, except in the cases provided for by this Law;

d) the adoption of decisions on the distribution of dividends, the reorganization and the liquidation of the enterprise shall not be permitted;

e) the performance of obligations arising before the commencement of the insolvency proceedings, the assumption of new obligations, agreement on new terms of payment and their securing shall not be permitted, except in the cases provided for by this Law;

f) the payment of interest on obligations arising before the commencement of the insolvency proceedings shall be suspended. At the same time, the accrual of interest, which shall be taken into account in the creditors' claims, shall not be suspended;

g) the accrual and payment of a penalty shall be suspended. If the insolvency proceedings are terminated due to the absence of grounds for insolvency, it shall be considered that the accrual of the penalty continued without interruption;

h) the application of new measures of procedural security shall not be permitted;

i) the consideration in court, arbitration or an administrative body of disputes initiated before the commencement of the insolvency proceedings and directed against the insolvency estate shall be suspended, and the initiation of new disputes shall not be permitted, except for the case where the dispute concerns the separation of a thing from the insolvency estate, or a case directly provided for by this Law. In the case provided for by this subparagraph, the running of the limitation period for the exercise of the right shall be suspended in accordance with Article 132 of the Civil Code of Georgia.

Article 56. Cancellation of an enforcement measure and a procedural security measure🔗

By the court's recognition of the insolvency application as admissible and the issuance of a ruling on opening the rehabilitation or bankruptcy regime, the restrictions imposed in the form of an enforcement measure and a procedural security measure applied against the debtor before the recognition of the insolvency application as admissible shall be cancelled.

Article 57. Application of Additional Moratorium Measures by Court Judgment🔗

1. The court is entitled to issue, on the basis of a reasoned application of a creditor, the debtor, the manager or another interested person, a ruling on the application of additional moratorium measures, namely:

a) prohibit the debtor from returning the things in the debtor's possession transferred under leasing, with a reservation of conditional ownership, or on another ground;

b) restrict or prohibit the debtor from disposing of property, including its alienation or encumbrance with rights, suspend the operation of those provisions of a contract concluded by the debtor that oblige the debtor to dispose of property;

c) prohibit the debtor's contractors from terminating, suspending and/or disrupting the provision of vitally important services to the debtor due to the commencement of insolvency proceedings, if the debtor performs towards them obligations arising after the insolvency application is declared admissible;

d) apply other measures that are not directly provided for by this paragraph and whose application is considered expedient based on the circumstances of the insolvency case.

2. If the application of additional moratorium measures is requested by an insolvency application, the court decides this issue by a ruling on declaring the insolvency application admissible and opening the rehabilitation or bankruptcy regime. In other cases, the court considers the application for the application of additional moratorium measures without an oral hearing, within 5 days from its submission.

3. The application of additional moratorium measures provided for by paragraph 1 of this Article shall not extend to a netting agreement as defined by the Law of Georgia "On Financial Collateral, Netting and Derivatives".

Article 58. Revocation by the Court of Individual Moratorium Measures🔗

1. The court shall be entitled, on the basis of a reasoned application of a creditor, debtor, manager or other interested person, to deliver a judgment on the revocation of individual moratorium measures.

2. The court shall be entitled to revoke the moratorium measure provided for by subparagraph "a" of Article 55 of this Law, if an enforcement measure is being carried out in respect of a perishable thing or a thing whose sale, despite the preservation of its characteristics, will be impossible after the expiry of the moratorium period. At the same time, the funds recovered as a result of enforcement shall be directed to the insolvency estate and shall not be used to satisfy an individual creditor.

3. The court shall be entitled to revoke the moratorium measure provided for by subparagraph "i" of Article 55 of this Law, if the case is being considered by a court of a foreign country or the case is being considered in accordance with arbitration procedural rules and, by maintaining the moratorium measure, damage is caused to the applicant's legitimate interests, including where the moratorium measure has a negative impact on the applicant's procedural rights, or due to missing the limitation period for exercising the right there is a risk of non-exercise of this right.

4. The court shall revoke the moratorium measure provided for by subparagraph "e" of Article 55 of this Law, on the basis of an application of a creditor, debtor or manager/supervisor, if it is necessary to attract additional financial resources to promote rehabilitation, and the operation of the moratorium measure prevents or substantially complicates the achievement of this aim. In this case, the applicant must substantiate that the assumption of new obligations does not worsen the position of creditors.

5. When considering an application on the revocation of individual moratorium measures, the court, in addition to the circumstances provided for by this Article, shall also assess whether damage is caused to the applicant by the application of the moratorium measure whose revocation he requests, and, if the infliction of damage is confirmed, whether the interest of avoiding the damage exceeds the statutory aim of equitable satisfaction of creditors. In the case of a request by a creditor for the revocation of the moratorium measure provided for by subparagraphs "a"–"c" of Article 55 of this Law, the damage may be manifested in a reduction of the value of the property.

6. The court shall consider an application on the revocation of individual moratorium measures without an oral hearing, within 5 days from its submission. If the applicant is a creditor or another third party, the court shall be obliged to schedule an oral hearing. The claim of a secured creditor from the subject of security shall be satisfied in accordance with Article 105 of this Law. In this case, the moratorium measure provided for by subparagraph "c" of Article 55 of this Law shall be revoked.

7. A transaction concluded contrary to the restrictions provided for by this Chapter is void. Another action contrary to the restrictions provided for by this Chapter, which does not involve the conclusion of a transaction, is an unlawful action and entails the imposition of the liability provided for by the Civil Code of Georgia.

Article 59. Insolvency estate🔗

1. The insolvency estate includes all the property of the debtor belonging to him as at the moment of the recognition of the application on insolvency as admissible, the property acquired/received/produced from that moment, including transferable licences and permits, as well as the property returned to the debtor in accordance with Chapter VIII of this Law, both in Georgia and outside Georgia.

2. The object of conditional ownership or the subject of leasing, the right to purchase which the debtor has, is not included in the insolvency estate. By decision of the manager/supervisor, the said property may remain in the possession and use of the debtor, if this is necessary for the purposes of rehabilitation or bankruptcy, provided that the satisfaction of the claims of the owner or the lessor provided for by the Civil Code of Georgia and the relevant contract is ensured by property included in the insolvency estate or other property.

3. In the event of the failure to establish the debtor's ownership right over property subject to registration, the manager/supervisor applies to the court or the relevant administrative body with a request for the recognition/confirmation of the debtor's ownership right over this property. A ruling of the court or an act of an administrative body is the basis for the registration of the debtor's ownership right over the property in the debtor's possession.

4. The insolvency estate does not include property which, in accordance with the Law of Georgia "on Enforcement Proceedings", is not subject to enforcement.

Article 60. Separation and Removal of Property from the Insolvency Estate🔗

1. A person who is entitled, on the basis of a proprietary or obligational claim, to request separation of property from the insolvency estate is not a creditor for the purposes of insolvency. The procedure for separation of property from the insolvency estate shall be determined by the legislation of Georgia.

2. The manager/supervisor has the right to abandon the right of ownership over property that has no liquidation value and whose realization in favour of the creditors is impossible, or to carry out the realization of this property if the costs of its storage and maintenance exceed its market value.

3. Property may be removed from the insolvency estate if, under a contract concluded between the debtor and a third party, the mutual obligations have been substantially performed and the said contract also provides for its transfer into the ownership of the third party. The manager/supervisor shall adopt the relevant decision on the basis of an application by the interested person.

4. The manager/supervisor shall refuse the interested person the removal from the insolvency estate of the property provided for by paragraph 3 of this Article if, as a result of the rehabilitation of the debtor, whose interests this decision contradicts, the full satisfaction of the said person is ensured.

5. If enforcement proceedings in respect of property included in the insolvency estate have been substantially completed and all prerequisites necessary for issuing an order on the transfer of ownership of this property exist, this property shall be removed from the insolvency estate and shall be transferred to the entitled person.

Article 61. Set-off of Mutual Claims🔗

1. A creditor who, as of the moment the insolvency application is declared admissible, has the right to set off mutual claims against the debtor, is entitled to exercise this right, notwithstanding the insolvency proceedings, except for the exception provided for by this Law. The right to set off mutual claims may be exercised only after the time for performance of the respective claim and/or the condition necessary for its arising has occurred.

2. A decision on the set-off of mutual claims arising after the insolvency application is declared admissible shall be made by the manager or the debtor in possession with the consent of the rehabilitation supervisor.

3. Set-off of mutual claims shall not be permitted if:

a) the creditor's claim has not been entered in the creditors' register;

b) the creditor's obligation towards the debtor arose during the 90 days before the insolvency application was declared admissible and the creditor assumed this obligation for the purpose of set-off of claims;

c) the creditor acquired the claim from another creditor during the 90 days before the insolvency application was declared admissible or after the insolvency application was declared admissible;

d) the creditor's claim arose on the basis of an action that is subject to challenge in accordance with Chapter VIII of this Law.

4. For the purposes of set-off of claims, until the contrary is proved, it shall be presumed that the debtor was insolvent during the 90 days before the insolvency application was declared admissible.

5. Set-off of claims effected in violation of the requirements of this article shall be subject to challenge in accordance with Chapter VIII of this Law.

6. This article shall not apply to netting provided for by the Law of Georgia on Financial Collateral, Netting and Derivatives, which is carried out in accordance with the procedure established by the same Law.

Article 62. Court judgment on opening the rehabilitation or bankruptcy regime🔗

1. The rehabilitation or bankruptcy regime shall be opened from the moment the court declares the insolvency application admissible and issues a ruling on opening the rehabilitation or bankruptcy regime. The court adopts the judgment on opening the rehabilitation or bankruptcy regime or on termination of the proceedings through an oral hearing. If the factual circumstances of the case are not disputed, the court is entitled to consider the said issue without an oral hearing. In the case of consideration of this issue through an oral hearing, the failure of interested persons to appear at the court hearing shall not prevent the court from considering and deciding the issue.

2. The court shall decide, within 30 days from the opening of the rehabilitation or bankruptcy regime, the issues related to creditors' voting rights. The manager/supervisor shall prepare and submit these issues to the court no later than 20 days after the opening of the rehabilitation or bankruptcy regime.

3. The court's judgment on the issues provided for by paragraph 2 of this article shall be published in accordance with the procedure established by this Law, as well as on the website of the "Legislative Herald of Georgia".

4. If a private complaint filed against the ruling on opening the rehabilitation regime is upheld, the court terminates the proceedings or issues a ruling on declaring the insolvency application admissible and opening the bankruptcy regime.

5. If a private complaint filed against the ruling on declaring the insolvency application admissible and opening the bankruptcy regime is upheld, the court terminates the proceedings or issues a ruling on declaring the insolvency application admissible and opening the rehabilitation regime.

Article 63. Content of a court ruling🔗

1. A ruling on declaring the insolvency application admissible and opening the rehabilitation or bankruptcy regime, or another ruling by which the rehabilitation or bankruptcy regime is opened or changed, shall contain:

a) a decision on the issue of management in the rehabilitation or bankruptcy regime;

b) the identity/name of the manager (if any);

c) in the case of appointment of two or more managers − the procedure and conditions for the exercise of powers by them jointly and/or separately;

d) a full description of the moratorium measures.

2. A ruling on declaring the insolvency application admissible and opening the rehabilitation regime, issued as a result of granting the application of the bankruptcy manager, shall additionally contain the procedure for covering bankruptcy expenses.

3. A ruling on declaring the insolvency application admissible and opening the bankruptcy regime, issued as a result of granting the application of the rehabilitation manager, shall additionally contain the procedure for covering rehabilitation expenses.

4. In the event of conversion of the insolvency regime, if the court considers it expedient, it shall, with the manager's consent, continue to perform the manager's functions within the framework of the new regime.

5. Immediately upon issuing a ruling on the opening of the rehabilitation regime, an insolvency application filed with the court requesting the opening of the bankruptcy regime, the examination of which is suspended, shall be refused.

Article 64. Resolution of the Issue of Administration under the Rehabilitation Regime🔗

1. Simultaneously with declaring the application for insolvency admissible and issuing a ruling on the opening of the rehabilitation regime, the court shall, in accordance with the procedure established by this Article, resolve the issue of administration under the rehabilitation regime, namely:

a) If, by the debtor's application for the opening of the rehabilitation regime, the leaving of the debtor in management is directly requested, the court shall leave the debtor in management if it considers this reasonable and substantiated;

b) If, by the creditor's application for the opening of the rehabilitation regime, the leaving of the debtor in management is directly requested, the court shall hear the debtor's opinion and, with his/her consent, leave the debtor in management if it considers this reasonable and substantiated;

c) If, by the debtor's application for the opening of the rehabilitation regime, the appointment of a rehabilitation manager is directly requested, the court shall appoint a rehabilitation manager in accordance with the procedure established by Article 11 or paragraph 6 of Article 47 of this Law;

d) If, by the creditor's application for the opening of the rehabilitation regime, the appointment of a rehabilitation manager is directly requested, the court shall appoint a rehabilitation manager in accordance with the procedure established by Article 11 of this Law, except when:

d.a) the debtor, together with the response, submits the written consent of the simple majority of creditors to leaving the debtor in management;

d.b) the debtor properly substantiates that he/she conducted entrepreneurial activity in good faith, in compliance with the principle of the duty of due care and with the reasonable belief that his/her actions and decisions were most favourable to him/her.

2. When leaving the debtor in management, the court shall appoint a rehabilitation supervisor to the debtor.

Article 65. Concept of Contestable Action🔗

1. The administrator/rehabilitation supervisor has the right to make the following actions contestable:

a) Intentional reduction of the insolvency estate − an action the purpose of which is to reduce the insolvency estate, to dispose of or conceal the debtor's property or part thereof during insolvency proceedings in order to restrict its availability to creditors, or to otherwise cause damage to the insolvency estate;

b) Impairment of the insolvency estate − transfer of property free of charge or at a price below market value, which was carried out before the debtor's insolvency occurred or which caused the debtor's insolvency and the result of which is a reduction in the volume/value of the insolvency estate, including:

b.a) disposal of the debtor's property;

b.b) assumption of an obligation by the debtor, if this occurs free of charge or in exchange for which the debtor receives inadequate counter-performance. Inadequate counter-performance exists when the debtor receives less than another person would ordinarily receive, and if this cannot be established, the adequacy of the performance shall be determined according to the market value of the property transferred by the debtor;

c) granting of preference − an action which prevents the satisfaction of creditors in accordance with the procedure established by this Law, and/or an action which grants a creditor such a preference as it would not have had without this action, including the performance of a creditor's claim whose performance deadline has not yet fallen due, the securing of a creditor's claim, except where the agreement on security was provided for at the time of conclusion of the principal debt contract.

2. The rules of contestation provided for by this Law do not restrict the use of legal remedies provided for by other laws, including the Civil Code of Georgia and the Law of Georgia “On Entrepreneurs”, against an action related to the concealment of the debtor's property or other bad-faith disposal thereof. At the same time, if there is another ground provided for by law for invalidity or compensation for damage, the relevant dispute shall be considered in accordance with the procedure established by the relevant legislation.

3. Creditors, the debtor and/or the administrator/rehabilitation supervisor cannot make (shall not make) contestable the set-off or final set-off carried out on the basis of the Law of Georgia “On Financial Collateral, Set-Off and Derivatives” and a set-off agreement concluded between the parties, and the operations carried out as a result thereof.

Article 66. Relevant period🔗

1. An act may be contested if it was performed within 1 year before the commencement of insolvency proceedings, and if the opposing party to the contestation is a person related to the debtor — within 2 years.

2. An act that the debtor performed to cause damage to a creditor may be contested if it was performed within 3 years before the application for insolvency is declared admissible.

3. An act shall be deemed performed upon the occurrence of its objective legal consequence. The moment of performance of acts that are performed in parts shall be deemed the moment of occurrence of the objective legal consequence of the last act.

Article 67. Burden of Proof🔗

1. The limitation period for the right of avoidance is 1 year, which is calculated from the date of the court's issuance of a ruling on recognizing the insolvency application as admissible and opening the rehabilitation or bankruptcy regime.

2. When exercising avoidance, the burden of proof shall be borne by the person exercising the right of avoidance.

3. If the debtor culpably delays applying to the court with an insolvency application, until the contrary is proved, the debtor shall be considered to have acted with intent to reduce the insolvency estate or cause damage to a creditor.

4. When establishing the existence of the intent provided for by paragraph 3 of this Article, the court shall assess:

a) whether the recipient of the benefit was the debtor or a person directly or indirectly related to the debtor;

b) whether the debtor retains actual economic control over the disposed property;

c) whether the disposal of all or substantially all of the debtor's assets was carried out within a short time;

d) whether the debtor's property was disposed of after the creditor submitted a warning on the enforcement of an existing claim against the debtor or filed a lawsuit against the debtor;

e) whether the debtor's property was disposed of in parallel with the debtor incurring a significant amount of debt;

f) any other circumstance that may indicate the existence of the said intent.

5. The court shall not satisfy a claim for avoidance if the party opposing the avoidance proves that:

a) the debtor and the party opposing the avoidance acted in good faith and the avoidable act corresponded to the ordinary business relations existing between the debtor and the party opposing the avoidance or to specific commercial usages and traditions;

b) after the avoidable act was committed, the party opposing the avoidance transfers to the debtor a thing of corresponding value or otherwise replenishes the debtor's property;

c) the third party opposing the avoidance, who is not a person related to the debtor and/or a creditor, did not know and could not have known about the debtor's insolvency.

6. For the purposes of this Chapter, a person shall also be considered a person related to the debtor if, at the time of recognizing the insolvency application as admissible, the relationship provided for by this Law between the said person and the debtor has been terminated, but it existed at the time of the avoidable act or during the 3 months before its commission.

Article 68. Legal consequences of contestation and scope of return🔗

1. As a result of the satisfaction of a claim submitted through the exercise of the right of contestation, the property shall be returned to the debtor in accordance with the rules on unjust enrichment, unless otherwise provided by this Article. Security arising as a result of the contested act shall be extinguished.

2. If the recipient of the contestable performance/benefit is a creditor, in parallel with the return of the property to the debtor, the creditor's claim that was satisfied by the contested act shall be restored.

3. If the counter-performance subsequent to the return of the property to the debtor concerns the separation of a part from the debtor's property, the separated property shall be transferred to the party opposing the contestation. If this is impossible, the party opposing the contestation shall acquire a creditor's claim equivalent to the value of the performance/benefit transferred to the debtor. This value shall be calculated as at the moment when the party opposing the contestation returns to the debtor the benefit received as a result of the contested act.

4. If the party opposing the contestation knew of the debtor's insolvency or that the debtor became insolvent as a result of the contested act, the debtor's claim for the return of the property may not be made dependent on the debtor's return to that party of what the debtor received from the party opposing the contestation.

5. If the party opposing the contestation knew of the debtor's insolvency or that the debtor became insolvent as a result of the contested act, at the wish of the person holding the right of contestation, instead of the return of the property, the party opposing the contestation may be required to pay the amount corresponding to the difference caused by the improper performance.

Article 69. Purpose of the rehabilitation regime🔗

1. The purpose of the rehabilitation regime is the approval of the rehabilitation plan.

2. The rehabilitation plan may provide for:

a) the rescue of the debtor as a going concern, as a result of which creditor claims are satisfied in full, except where a creditor whose claim is reduced agrees to its reduction;

b) achievement by the collective of creditors, as a single whole, of a better result than would have been possible in the event of the debtor's initial bankruptcy, taking into account that each creditor will receive at least as much as it would have received in the event of the debtor's initial bankruptcy. This may imply the rescue of the debtor as a going concern, as well as the complete or substantially complete alienation or management of the debtor or its property for the purpose of long-term satisfaction of creditors.

3. In the rehabilitation regime, preference is given to the rehabilitation plan provided for by subparagraph "a" of paragraph 2 of this Article, except where the rehabilitation manager/rehabilitation supervisor considers that the rehabilitation plan provided for by subparagraph "a" of paragraph 2 of this Article cannot reasonably be implemented.

4. A creditor may be satisfied with less than the minimum provided for by subparagraph "b" of paragraph 2 of this Article only if it agrees to such reduction.

Article 70. Management of the debtor in the rehabilitation regime🔗

1. In the rehabilitation regime, the debtor's activities and property are managed by the debtor in possession – under the supervision of the rehabilitation supervisor, or by the rehabilitation manager – independently, in accordance with the requirements of this Law.

2. In the rehabilitation regime, the issue of management of the debtor is decided by the court in accordance with the procedure established by this Law.

Article 71. Publicity in the rehabilitation regime🔗

No later than 2 working days after issuing a ruling on recognizing the insolvency application as admissible and opening the rehabilitation regime, the rehabilitation manager shall publish information on the opening of the rehabilitation regime and the form of management, as well as on the identity of the manager (his/her identification data and contact information). In the case provided for by Article 73 of this Law, the obligation established by this Article shall be imposed on the rehabilitation supervisor.

Article 72. Suspension of authority to manage and/or represent🔗

1. Immediately upon the appointment of the rehabilitation manager, the management and representative authority provided for by the Law of Georgia "On Entrepreneurs" shall be suspended for all persons authorized to manage and/or represent the debtor. Each such person shall be obliged, by decision of the rehabilitation manager, in exchange for reasonable remuneration in an amount determined by the latter, to cooperate with the rehabilitation manager and participate in the preparation of the draft rehabilitation plan and in the implementation of this plan.

2. The rehabilitation manager shall exercise his/her powers and perform his/her functions in accordance with the procedure established by this Law and within the determined limits.

Article 73. Debtor in Possession🔗

1. The rules established by this Law for a rehabilitation manager shall apply to a debtor in possession, except for exceptions directly provided for by this Law.

2. A debtor in possession shall have all the rights and obligations defined by this Law for a rehabilitation manager, except:

a) the rights and obligations that a rehabilitation supervisor has;

b) the right to challenge the actions of the debtor's former or current director or other persons authorized to manage and represent, and transactions concluded by them.

3. A debtor in possession shall be obliged not to perform, without the consent of the rehabilitation supervisor, any action in respect of which this Law directly provides for the necessity of the rehabilitation supervisor's consent.

4. Before approval of the rehabilitation plan, a debtor may assume an obligation/conclude a contract outside the scope of ordinary business activity only with the consent of the rehabilitation supervisor. The refusal of the rehabilitation supervisor may be appealed to a court.

5. Upon request by a creditor holding 10 percent of the total votes of creditors with voting rights, the creditors' committee, or the rehabilitation supervisor, the court shall consider a motion for the appointment of a rehabilitation manager instead of the debtor in possession if one of the following grounds exists:

a) a ground for challenge provided for by Chapter VIII of this Law;

b) manifestation by the debtor, before or after the opening of the rehabilitation regime, of bad faith or incompetence, violation of the principle of the duty of necessary care, or conduct of management activity with significant violations;

c) abandonment of management by the debtor.

6. The creditors' meeting is entitled at any time, by a majority of not less than 2/3 of the creditors with voting rights present at the creditors' meeting, to replace the debtor in possession with a rehabilitation manager. The court is entitled not to agree with this decision of the creditors' meeting and to leave the debtor in possession. It issues a ruling on this. The court is entitled, before deciding the said issue, to hear the debtor and the rehabilitation supervisor.

7. In the event of the death of the person authorized to manage and represent the debtor in possession, or in the presence of circumstances due to which this person cannot perform his/her duties, the judge shall immediately appoint the rehabilitation supervisor as the rehabilitation manager.

8. The rehabilitation supervisor, creditors, and partners have the right to receive information from the debtor in possession. The purpose of requesting information from the debtor in possession is to identify the grounds for challenge provided for by this Law, possible cases of improper disposal or concealment of assets, as well as to consider the grounds for and possibility of appointing a manager.

9. It shall be inadmissible in criminal or administrative proceedings to use as evidence against the debtor information provided by the debtor in accordance with this Law which was not independently accessible from the accounting and/or other documentation collected by the rehabilitation supervisor, a creditor and/or a partner.

Article 74. Rehabilitation Supervisor🔗

1. The court shall appoint a rehabilitation supervisor only in the case of a debtor in possession.

2. The rehabilitation supervisor is entitled to:

a) apply to the court to convene a creditors' meeting in the following cases:

a.a) to consider the grounds for an objection provided for by this Law;

a.b) to consider the issue of replacing the debtor in possession with a rehabilitation manager;

a.c) at the request of creditors holding 10 percent of the total claims, to decide a matter within the competence of the creditors' meeting;

b) request and receive a report on the debtor's activities, review it and require that the debtor's property, all accounting and financial records, business documents, transactions, including in electronic form and in the form of a computer program, be fully accessible to him/her;

c) for the purposes of drawing up the creditors' register, give or withhold consent to the debtor's full or partial rejection or recognition of a creditor's claim;

d) prepare, together with the debtor, a draft rehabilitation plan or a draft revision of this plan. The rehabilitation supervisor shall be obliged to attach reasoned written comments to the draft rehabilitation plan only if the rehabilitation supervisor and the debtor cannot agree on individual components of the rehabilitation plan and, in the assessment of the rehabilitation supervisor, the said draft plan does not comply with the requirements and standards established by this Law. If the rehabilitation supervisor does not attach reasoned comments to the draft rehabilitation plan, he/she shall be deemed to agree to this draft;

e) chair the creditors' meeting;

f) cooperate without restriction with creditors and the creditors' committee (if any) for the performance of his/her functions; attend meetings of the creditors' committee and obtain the information necessary for him/her;

g) exercise before administrative bodies and in court all powers granted by the legislation of Georgia to an interested person, including unrestricted access to information about the debtor held in court, including the closed part of the information, subject to maintaining its confidentiality;

h) request from the debtor explanations, information and/or a report on any matter necessary for the exercise of his/her powers;

i) exercise other powers provided for by this Law.

Article 75. Rehabilitation Manager🔗

1. The rehabilitation manager owes a fiduciary duty to the debtor's creditors, which implies the obligation to act in the interests of the collective body of the debtor's creditors. In order to achieve the rehabilitation objectives and perform obligations, the rehabilitation manager has all the powers and all corresponding obligations conferred by the Law of Georgia on Entrepreneurs on a person authorized to manage, direct and represent a business entity.

2. The debtor's employees, director, and other persons authorized to direct and represent are obliged, in the exercise of their powers, to cooperate with the rehabilitation manager and assist him/her.

3. The specific powers of the rehabilitation manager provided for by paragraph 4 of this Article do not limit the general powers conferred on him/her by paragraph 1 of this Article.

4. The rehabilitation manager is authorized to:

a) take measures to preserve and continue the debtor's operations;

b) perform all relevant actions in the name of the debtor and sign any document;

c) take over and take into his/her personal control all documents, accounting records and books related to the debtor's activity, including in electronic or other form;

d) obtain or restore possession of property belonging to the debtor, collect the debtor's property and for this purpose exercise the right of avoidance provided for by this Law or perform other actions, or conduct any proceedings which he/she considers appropriate for the purposes of rehabilitation;

e) approve or terminate existing contracts and conclude new contracts;

f) sell or otherwise dispose of the debtor's property at an auction or on the basis of a contract. A contract of sale, leasing or lease-purchase with a person related to the debtor, by which the debtor's property is disposed of, may be concluded only with the consent of the creditors' committee, and, in the absence of the creditors' committee, with the consent of the creditors' meeting;

g) raise funds on the basis of a loan agreement or otherwise and for this purpose apply security measures in respect of the debtor's property;

h) take necessary personnel decisions − retain existing employees, conclude new employment contracts in compliance with the rules established by the labour legislation of Georgia, or terminate existing employment contracts;

i) before approval of the rehabilitation plan, dispose of the debtor's property without the consent of the court or the creditors, except for property used as security and conditional ownership;

j) appoint a lawyer, accountant or a person with another profession/qualification whose involvement is necessary for the rehabilitation manager to successfully perform his/her functions;

k) appear in court as the debtor's representative, initiate any legal process or proceedings;

l) obtain or maintain insurance in connection with the debtor's economic activity and property;

m) acquire, receive, make or endorse by endorsement any cheque or promissory note on behalf of the debtor;

n) appoint a representative for the performance of any activity that it is advisable to perform through a representative;

o) carry out all actions necessary for the realization of the debtor's property;

p) make the payments necessary for the performance of the functions of the rehabilitation manager;

q) establish subsidiary companies of the debtor;

r) transfer, in whole or in part, the debtor's enterprise and/or property to the debtor's subsidiary companies in the manner prescribed by law;

s) lease (rent) out or take on lease any property that is necessary or favorable for the debtor's economic activity;

t) terminate a lease contract concluded in respect of the debtor's property or give consent to its termination and recover possession of the property vacated from lease;

u) conduct negotiations on behalf of the debtor and conclude a contract on the write-off or restructuring of any debt of the debtor, including in the form of a mutual compromise agreement or unilateral write-off or restructuring of the debt in favor of the debtor;

v) demand from the partners the making of contributions not yet made to the debtor's charter capital, if this is provided for by the corporate documents;

w) in the bankruptcy or rehabilitation process of a person who has a debt owed to the debtor, submit a claim as a creditor of the relevant rank and participate in the relevant distribution;

x) file an application on insolvency with the court requesting the opening of a bankruptcy regime against the debtor;

y) make changes to the debtor's registered address and other data the registration of which is mandatory;

z) convene a meeting of the debtor's partners and request the adoption of a decision on any matter within their competence;

aa) request from the creditors the adoption of a decision on any matter within their competence, which does not imply the holding of a creditors' meeting;

bb) distribute to the creditors the amounts received from the realization of property. In doing so, he/she shall take into account preferential claims;

cc) apply to the court to ensure the convening and holding of a creditors' meeting and chair the creditors' meeting;

dd) carry out other actions necessary for the exercise of his/her powers provided for by this Law.

5. A transaction that goes beyond the debtor's ordinary business activity shall be concluded by the rehabilitation manager with the consent of the creditors' meeting. The creditors' meeting shall adopt a decision by a simple majority of the votes of the creditors with voting rights present at the creditors' meeting.

6. No partner, employee or director of the debtor shall have the right to manage or represent the debtor without the consent of the rehabilitation manager. The consent given by the rehabilitation manager may be general or special.

7. The rehabilitation manager shall perform his functions as quickly and efficiently as possible, taking into account the interests of the body of creditors of the debtor, and shall not unjustifiably and without necessity cause damage to their interests.

8. Immediately upon appointment, the rehabilitation manager shall acquire the right of control and custody over the debtor's assets and property over which, in his opinion, the debtor has the corresponding rights.

9. In carrying out his activities, the rehabilitation manager shall conduct negotiations with creditors both individually and collectively.

10. The rehabilitation manager is obliged to comply with the instructions set out in court rulings in order to ensure, in accordance with this Law, the management of the debtor's activities and property.

Article 76. Creditors' Committee🔗

1. The creditors' meeting is entitled, for the purpose of facilitating the exercise of creditors' rights, to elect a creditors' committee.

2. Election of the creditors' committee is mandatory if the debtor has not fewer than 50 creditors and the indicators of the debtor's last economic year satisfy at least one of the following 2 criteria:

a) the total value of its assets exceeds 10 million GEL;

b) its annual income exceeds 20 million GEL.

3. The proposal to elect the creditors' committee shall be made by the chairperson of the creditors' meeting at the first creditors' meeting convened after the opening of the rehabilitation regime. The candidate who receives the greatest support of the respective creditors shall be considered elected as a member of the creditors' committee.

4. The creditors' committee consists of 3 members. 1 member of the creditors' committee shall be elected by the secured creditors, and 2 members − by the unsecured creditors.

5. The creditors' committee shall carry out its activities impartially. Members of the creditors' committee shall not have private interests different from the interests of the body of creditors.

6. The following persons may not be elected as members of the creditors' committee:

a) holders of not less than 25 percent of the debtor's share or of the corresponding shares, as well as holders of a share or shareholders who participate in the management of the debtor or are able to influence its management;

b) persons related to the management of the debtor and/or to holders of not less than 25 percent of the debtor's share or of the corresponding shares, or to the debtor;

c) creditors who are simultaneously competitors of the debtor, and persons related to them.

7. The creditors' committee is capable of taking decisions if not fewer than 2 members of this committee attend its meeting.

8. The creditors' committee shall, by a majority of its members, elect from among its own composition the chairperson of the creditors' committee, who shall chair its meeting.

9. The creditors' committee shall take decisions by a majority of votes. During the voting procedure, a member of the creditors' committee shall not be entitled to abstain from expressing a position. In the event of an equal division of votes, the vote of the chairperson of the creditors' committee shall be decisive.

10. The creditors' committee is entitled to:

a) demand from the rehabilitation manager, the debtor in management, the rehabilitation supervisor:

a.a) submission of information on the course of the performance of their functions by the rehabilitation manager, the debtor in management, the rehabilitation supervisor;

a.b) submission of information on the debtor's current activities and financial condition, as well as to review documents confirming the circulation of funds;

a.c) attendance at a meeting of the creditors' committee. The invitation to attend this meeting shall be sent to the respective person not later than 7 days before the date of the meeting;

b) participate in the preparation of the draft rehabilitation plan, as well as prepare a draft of amendments to be made to the rehabilitation plan;

c) prepare recommendations on the issues included in the agenda of the creditors' meeting;

d) apply to the court with a motion for the dismissal of the rehabilitation manager from office and the appointment of a new rehabilitation manager.

11. A member of the creditors' committee may request only the relevant information necessary for the exercise of his/her powers.

12. The creditors' committee shall:

a) actively cooperate with the rehabilitation manager, the debtor in possession, and the rehabilitation supervisor for the purpose of preparing a draft rehabilitation plan;

b) provide information about the activities of the creditors' committee and its decisions to other creditors;

c) hold consultations with other creditors on individual issues and receive opinions and comments from them.

13. The issue of remuneration for the activities of a member of the creditors' committee shall be decided by the court no later than 5 days after the election of the creditors' committee by the creditors' meeting. The amount of remuneration for the activities of a member of the creditors' committee may be determined in accordance with the time spent participating in the meetings of the creditors' committee. The total amount of remuneration for the activities of a member of the creditors' committee shall not exceed 20 per cent of the remuneration determined for the manager. The court is entitled, in exceptional circumstances, to increase the said remuneration.

14. Reimbursement of the expenses related to the remuneration of the activities of the members of the creditors' committee, as well as to the convening and holding of meetings of the creditors' committee, shall be made from the insolvency estate.

15. The creditors' committee shall agree in advance with the court on the amount of the expected expenses related to its activities.

16. A member of the creditors' committee may be removed from the creditors' committee if his/her bad faith, negligence, lack of appropriate skills, incompetence, inefficiency, conflict of interest, lack of confidence in him/her, or violation by him/her of the rules established by Article 77 of this Law is revealed. A member of the creditors' committee shall also be removed if a circumstance provided for by paragraph 6 of this Article arose or was revealed after the election of the respective person as a member of the said committee. The issue of removal of a member of the creditors' committee may be raised by a person entitled to participate in the creditors' meeting, as well as by the court on its own initiative. The said issue may be raised during any creditors' meeting or by submitting an application to the court. This application shall be considered at the nearest creditors' meeting, but not later than 15 days after its submission. If a creditors' meeting is not scheduled to be held within this period, the court shall be obliged to specifically convene a creditors' meeting on the said issue and ensure its holding. The issue of removal of a member of the creditors' committee and the election of a new member to replace him/her shall be decided by the creditors of the group that elected the member subject to removal. A member of the creditors' committee shall be considered removed if more than half of the creditors of the said group support his/her removal. The creditors' meeting, together with the decision on the removal of a member of the creditors' committee, must adopt a decision on the election of a new member of the creditors' committee in accordance with the procedure established by this Article.

17. If, notwithstanding the existence of the ground provided for by paragraph 16 of this Article, the creditors' meeting does not adopt a decision on the removal of a member of the creditors' committee, the court is entitled to itself adopt a decision on the removal of a member of the creditors' committee. In this case, the court shall be obliged to ensure the convening of a creditors' meeting within 15 days for the election of a new member of the creditors' committee.

Article 77. Liability of Members of the Creditors' Committee🔗

1. Members of the creditors' committee shall act in good faith, in the belief that their decisions and advice are the best for the performance of the rehabilitation plan in accordance with the interests of the creditors.

2. Members of the creditors' committee are accountable to the creditors.

3. Members of the creditors' committee shall be liable only for those actions/decisions that they performed/adopted for the purpose of intentionally causing damage to the debtor or creditors or proceeding from their own private interests, including for the use of confidential information for personal purposes.

4. A member of the creditors' committee shall be obliged not to disclose confidential information received by him/her about the debtor, the rehabilitation supervisor, the rehabilitation manager, and not to use it for his/her own interests or the private interests of a person related to him/her. In case of violation of this rule, both the creditor and the debtor have the right to demand compensation for damage from the said member of the creditors' committee.

Article 78. Report on the debtor's activity🔗

1. Within 45 days from the issuance of the ruling on declaring the insolvency application admissible and opening the rehabilitation regime, the rehabilitation manager/rehabilitation supervisor prepares a report on the debtor's activity, for which, no later than 3 working days from appointment as rehabilitation manager/rehabilitation supervisor, he/she addresses the relevant persons in writing and requests from them the submission of the necessary information within 10 working days.

2. The rehabilitation manager/rehabilitation supervisor is entitled to request the submission of the information provided for by paragraph 1 of this Article from a person who, within 1 year before the issuance of the ruling on declaring the insolvency application admissible and opening the rehabilitation regime, was:

a) the registered director of the debtor or held the position of head;

b) a partner of the debtor;

c) an employee of the debtor;

d) an auditor of the debtor or a person providing other types of professional services to him/her.

3. A debtor in administration is obliged, in coordination and cooperation with the rehabilitation supervisor, to prepare the report on the debtor's activity himself/herself within 30 days from the issuance of the ruling on declaring the insolvency application admissible and opening the rehabilitation regime.

4. The report on the debtor's activity shall contain:

a) a statement by which the rehabilitation manager/debtor in administration confirms that the submitted information, to the extent known to him/her, is accurate and complete;

b) a statement that the report on the debtor's activity is prepared as of the date of opening of the rehabilitation regime;

c) information on all assets of the debtor (their book and estimated realizable values shall be indicated), including the characteristics of encumbered and unencumbered assets (including mortgage existing on future property);

d) information on all obligations of the debtor, including:

d.a) the amount of obligations existing towards employees;

d.b) the amount of secured debts;

d.c) the amount of unsecured debts, except for obligations existing towards employees;

e) the estimated amount of the deficit or surplus assets related to the satisfaction of preferential claims;

f) the estimated amount of the deficit related to the coverage of unsecured claims, or the estimated value/amount of surplus assets that will remain after the coverage of unsecured debts;

g) the estimated amount of the total assets available for the coverage of secured debts, or the estimated amount of surplus assets that will remain after the coverage of secured debts;

h) the following information related to the debtor's creditors:

h.a) information about those creditors of an instalment, lease-purchase, leasing of a movable thing or conditional sale contract who, on the basis of an agreement on conditional ownership or of law, have retained ownership of the respective property, and the characteristics of this property;

h.b) information about those consumers to whom funds have been prepaid to the debtor for the purchase of goods or services. The total amount of these funds shall be indicated;

h.c) information about all other known creditors;

h.d) the amount of the debt owed to each creditor;

h.e) the characteristics of the measure of securing the obligation applied with respect to each creditor;

h.f) the date of origin of each security;

h.g) the value and amount of the subject of each security;

h.h) the total of credit obligations;

i) the name and address of each partner of the debtor and a detailed description of his share participation.

5. The expense incurred for the preparation of the debtor's activity report provided for by this Article, which the rehabilitation manager/rehabilitation supervisor considers a reasonable expense, is part of the rehabilitation expenses. The decision of the rehabilitation manager on the matter of incurring expenses may be appealed to the court.

6. Failure by the person provided for by paragraph 2 of this Article to submit the information necessary for the debtor's activity report does not release the rehabilitation manager/debtor in management from the obligation to prepare the said report. The rehabilitation manager/debtor in management shall be obliged to prepare the debtor's activity report himself as of the date of the ruling on declaring the insolvency application admissible and opening the rehabilitation regime. In this report, the rehabilitation manager/debtor in management shall indicate the failure by the respective person to submit the information necessary for the debtor's activity report.

7. If, in the case of a debtor in management, the person provided for by paragraph 2 of this Article does not submit the requested information, the rehabilitation supervisor shall notify the court thereof. In this case, the rehabilitation supervisor is entitled to request the removal of the debtor from management and the appointment of a rehabilitation manager.

8. The rehabilitation manager/rehabilitation supervisor is entitled to submit an application to the court requesting that the debtor's activity report not be disclosed in full or in part to all creditors or to a part of them, if, in the applicant's opinion, its disclosure would harm the rehabilitation process, hinder the achievement of the rehabilitation purpose or cause unjustified harm to the debtor.

9. If the court considers the respective application of the rehabilitation manager/supervisor justified, it shall issue a ruling on the full or partial disclosure of the debtor's activity report to all creditors or to a part of them.

Article 79. Priority satisfaction of rehabilitation expenses🔗

1. Under the rehabilitation plan, without prejudice to the rights of secured creditors, rehabilitation expenses shall be satisfied with priority.

2. Rehabilitation expenses are:

a) court costs (state fee and costs related to the hearing of the case);

b) administrative expenses related to the activities of the rehabilitation manager, the rehabilitation supervisor and the creditors' committee, and expenses for remuneration of their activities.

Article 80. Satisfaction of new creditor claims🔗

1. Without prejudice to the rights of secured creditors, priority shall be given to the satisfaction of a claim arising after the recognition of the insolvency application as admissible and the issuance of a ruling on the opening of the rehabilitation regime, over the satisfaction of other creditor claims, except where the respective creditor agrees to a different satisfaction.

2. An obligation arising after the recognition of the insolvency application as admissible and the issuance of a ruling on the opening of the rehabilitation regime shall be performed within the term agreed between the parties.

3. A creditor holding a new claim provided for by this Article shall have the right to file an action with the court requesting the cancellation of the moratorium in the part of the said claim.

Article 81. Draft rehabilitation plan🔗

1. The rehabilitation manager/rehabilitation supervisor, on the basis of the debtor's activity report and the data of the creditors' register, prepares a draft rehabilitation plan and submits it to the creditors no later than 2 months from the issuance of the ruling on declaring the insolvency application admissible and opening the rehabilitation regime. Before the expiry of this term, the rehabilitation manager/rehabilitation supervisor is entitled to apply to the court with a request for a one-time extension of the said term by not more than 1 month. This request must be substantiated. In it, the failure to submit the draft rehabilitation plan to the creditors within the established term must be explained by objective reasons.

2. If the draft rehabilitation plan is prepared by a debtor in management, before offering the draft rehabilitation plan to the creditors and during the respective negotiations, he shall take into account the substantiated comments of the rehabilitation supervisor (if any), the purpose of which is to ensure compliance of the draft rehabilitation plan with the requirements and standards established by this Law.

3. The draft rehabilitation plan shall contain:

a) corporate data of the debtor. The partners and the registered director (directors) shall be indicated;

b) information about the rehabilitation manager/rehabilitation supervisor (identity/name and identification data), the date of his appointment, a copy of the ruling on declaring the insolvency application admissible and opening the rehabilitation regime;

c) the date when the draft rehabilitation plan is to be submitted to the creditors;

d) a copy of the debtor's activity report or a brief summary of this report (except for the part protected from disclosure), information about the identity of the person who prepared the debtor's activity report, the comments of the rehabilitation manager/rehabilitation supervisor attached to the report;

e) if by a court ruling the disclosure of the debtor's activity report was fully or partially restricted − the dates of submission of the respective application to the court and of the issuance of this ruling;

f) if the debtor's activity report was not or could not be prepared in accordance with the procedure established by this Law − information on the debtor's financial condition prepared by the rehabilitation manager as of the latest possible date, which shall not be earlier than the date of issuance of the ruling on declaring the insolvency application admissible and opening the rehabilitation regime;

g) the creditors' register, except where the debtor's activity report or its brief summary contains the full creditors' register;

h) a proposal according to which rehabilitation is to be achieved and which may include:

h.a) reorganization provided for by the Law of Georgia "On Entrepreneurs", as one of the constituent parts of the rehabilitation regime;

h.b) modification of the debtor's obligations:

h.b.a) by deferral of payment of debts;

h.b.b) by reduction or cancellation of the principal debt and interest;

h.b.c) by covering the old debt with a new debt;

h.b.d) satisfaction of claims in another manner;

h.b.e) conversion of claims into a share in the debtor's enterprise or in another enterprise. For this purpose, the prior consent of the respective creditor is mandatory;

h.b.f) on the condition that, upon payment, first the principal amount of the debt is covered, and after its coverage – other expenses and payables;

h.c) set-off of the mutual claims of the debtor and the creditor within the limits established by this Law;

i) an indication as to the form of approval of the draft rehabilitation plan by the creditors (approval at a creditors' meeting or without it, by using an alternative procedure (issuance of written consent, electronic correspondence, remote participation and others));

j) a report on how the management and financing of the debtor proceeded after the issuance of the ruling on declaring the insolvency application admissible and on opening the rehabilitation regime, including on whether the debtor's asset was disposed of (the grounds and conditions of its disposal shall be indicated), and an explanation of how the management and financing of the debtor will continue in the event of approval of the rehabilitation plan;

k) the estimated value of the debtor's net assets;

l) the amount of remuneration for the activities of the rehabilitation manager/rehabilitation supervisor and the basis for its calculation;

m) the cost of any other service rendered by the rehabilitation manager/rehabilitation supervisor, on the condition that this cost must be approved by the creditors' committee, and in the absence of a creditors' committee, it must be approved by the creditors by the decision-making procedure;

n) the date of entry into force of the rehabilitation plan determined in accordance with paragraph 1 of Article 85 of this Law;

o) any other information which, in the opinion of the rehabilitation manager/rehabilitation supervisor, will assist the creditors in making a decision on the proposed draft rehabilitation plan.

4. Preferential claims are equal in order of priority. Preferential debts shall be paid in full, except where the debtor's assets are insufficient to cover them in full, in which case the preferential debts are reduced in equal proportion.

5. The draft rehabilitation plan may provide for the application of individual moratorium measures. The moratorium measures provided for by the rehabilitation plan remain in force during the period of performance of this plan, except where a court ruling has been issued on the cancellation of any moratorium measure.

6. The draft rehabilitation plan may also provide for mechanisms of supervision over the performance of the rehabilitation plan, including the retention of the rehabilitation manager/rehabilitation supervisor. If the draft rehabilitation plan does not provide for the said mechanism, the creditor is entitled, before the approval of the rehabilitation plan by the court, to apply to the court with a motion on the application of a specific measure of supervision over the performance of the rehabilitation plan.

7. The rehabilitation manager/rehabilitation supervisor shall, immediately after drawing up the draft rehabilitation plan, send it to all known creditors and all partners of the debtor.

8. A creditor is entitled, at any time before the sending of the invitation to attend the creditors’ meeting, to submit to the rehabilitation manager/rehabilitation supervisor and/or the creditors’ committee (if any) its own draft rehabilitation plan for consideration at the creditors’ meeting. It shall be considered in accordance with the procedure established by Article 82 of this Law.

9. The rehabilitation manager/rehabilitation supervisor shall submit to the creditors, together with the draft rehabilitation plan, a detailed description of the remuneration received/receivable in exchange for the services rendered and of the expenses incurred, indicating the corresponding amounts.

Article 82. Approval of the Draft Rehabilitation Plan by Creditors🔗

1. Creditors shall approve the draft rehabilitation plan proposed by the rehabilitation manager/rehabilitation supervisor no later than 6 months after the issuance of a ruling on declaring the insolvency application admissible and opening the rehabilitation regime. The creditors' meeting is entitled, by a decision adopted in accordance with the procedure established by paragraph 7 of Article 13 of this Law, to extend the period for consideration of the draft rehabilitation plan once by no more than 3 months. The decision on the extension of this period shall be communicated to the court.

2. If, within the period established by paragraph 1 of this Article, the creditors do not approve the draft rehabilitation plan, the court shall issue a ruling on opening the bankruptcy regime.

3. A decision adopted by creditors through the use of an alternative procedure, in accordance with this Law and the specifics specified in the draft rehabilitation plan, shall be equivalent to a decision of the creditors' meeting.

4. The creditors' meeting is entitled, by the majority established by this Article, to approve the proposed draft rehabilitation plan:

a) without changes proposed by creditors;

b) with changes proposed by creditors, with the consent of the rehabilitation manager/rehabilitation supervisor.

5. In the process of approving the draft rehabilitation plan, the right to vote shall be determined in accordance with the value of the creditor's claim in the creditors' register.

6. An unsecured creditor has the right to vote in accordance with paragraph 5 of this Article. A secured creditor does not have the right to vote when voting in the process of approving the proposed draft rehabilitation plan, except when the draft rehabilitation plan provides for a change to the terms of a contract concluded between the debtor and the secured creditor.

7. The creditors' meeting has a quorum if more than half of the votes of unsecured creditors and of secured creditors having the right to vote in accordance with paragraph 6 of this Article are represented at it. Secured creditors and unsecured creditors may meet together or separately to consider the draft rehabilitation plan.

8. Secured creditors having the right to vote and unsecured creditors shall vote separately on the draft rehabilitation plan.

9. Approval of the draft rehabilitation plan shall be by a simple majority of the votes of unsecured creditors and by a simple majority of the votes of secured creditors having the right to vote in accordance with paragraph 6 of this Article.

10. For the purposes of paragraph 9 of this Article, the votes of creditors who are related persons to the debtor shall not be taken into account. A creditor shall not be considered a related person to the debtor if the rehabilitation manager/rehabilitation supervisor, on the basis of a report on the debtor's activities and as a result of due diligence, does not conclude that the creditor is a related person to the debtor. The status of a related person to the debtor shall be indicated in the invitation to attend the creditors' meeting sent to the creditor.

11. Where one of the creditors is a Legal Entity of Public Law – Revenue Service, its consent shall be deemed given if the draft rehabilitation plan provides for the full repayment of the principal amount of tax claims no later than 5 years from the entry into force of the rehabilitation plan, through the annual proportionate satisfaction of claims.

12. The rehabilitation manager/rehabilitation supervisor shall submit the rehabilitation plan approved by the creditors to the court for approval no later than 5 days after the adoption of this decision by the creditors.

Article 83. Approval of a Rehabilitation Plan by the Court🔗

1. The court approves the rehabilitation plan approved by the creditors in accordance with Article 82 of this Law, if the requirements of this Law, as well as the rules for convening the creditors' meeting and voting, are observed.

2. It shall be inadmissible for the court to approve a rehabilitation plan that:

a) provides for such repayment of preferential debts as does not imply their repayment as a priority compared to non-preferential debts, except in the case of the consent of the relevant creditor;

b) violates the principle of proportionality in the groups of preferential creditors and unsecured creditors, except in the case of the consent of the relevant creditor(s);

c) a creditor does not receive or retain at least such value of its claim as it would receive on the basis of a ruling on declaring the insolvency application admissible and opening the bankruptcy regime, except in the case of the consent of this creditor. When calculating the bankruptcy minimum and determining the best interests of creditors, the net present value method shall be applied;

d) a secured creditor receives less than it would receive from the realisation of the property used as the subject of the security, except in the case of the consent of this creditor;

e) new creditor claims are not protected in the manner prescribed by this Law.

Article 84. Rejection of a Draft Rehabilitation Plan by the Creditors' Meeting🔗

If the creditors' meeting does not approve (rejects) the draft rehabilitation plan in the manner prescribed by this Law, the court is entitled, on the basis of an application by the rehabilitation manager/rehabilitation supervisor, to approve the rehabilitation plan in accordance with Article 83 of this Law, if the following conditions exist simultaneously:

a) the group of unsecured or secured creditors approved the proposed draft rehabilitation plan by the majority established by this Law;

b) the court considers that the proposed draft rehabilitation plan will be implemented and the creditors' rights are protected in accordance with this Chapter.

Article 85. Effect of approval of the rehabilitation plan (entry into force)🔗

1. The rehabilitation plan shall enter into force upon its approval by the court, except where the rehabilitation plan provides for a different date of its entry into force, which shall be no later than 1 month after the approval of the rehabilitation plan by the court.

2. After the entry into force of the rehabilitation plan, its performance shall be mandatory:

a) for all parties provided for by the rehabilitation plan and for the persons to whom this plan relates;

b) for those creditors whose claims were not recognized in accordance with this law;

c) for those creditors who voted against the rehabilitation plan.

3. A rehabilitation plan that has entered into force does not release the debtor:

a) from the debt that arose before the approval of the rehabilitation plan, if the creditor was not sent a notice in accordance with the procedure established by this law and it is presumed that he was not aware and/or could not have been aware of the insolvency proceedings pending against the debtor;

b) from the tax obligation in relation to which he submitted a tax declaration fraudulently, by deception or with the intent to deliberately evade tax.

Article 86. Revocation or amendment by the court of an approved rehabilitation plan🔗

1. If it is revealed that the rehabilitation plan was approved by deception or fraudulently, the court is entitled, on the basis of an application of an interested person, to revoke the approved rehabilitation plan no later than 6 months after approval.

2. The ruling on the revocation of the rehabilitation plan shall provide for the legal remedies of the bona fide person for whom the rehabilitation plan was reliable and lawful. The same ruling revokes the condition of release of the debtor from obligations.

3. In the case provided for by paragraph 3 of Article 85 of this law, the court is entitled, on the basis of an application of an interested creditor, to amend the approved rehabilitation plan and, if it considers the creditor's application substantiated, to take into account the satisfaction of his claim in accordance with the procedure established for the relevant group of creditors, in compliance with the principle of proportionality of the claim. Before making this judgment, the court shall hear the debtor.

Article 87. Protection of secured creditor🔗

1. The rehabilitation manager/rehabilitation supervisor is entitled, on its own initiative or on the basis of a motion by a secured creditor, to apply to the court with a request for the release from the moratorium of property used as the object of security and for obtaining consent for its sale, where such property is not necessary for achieving the purpose of rehabilitation.

2. If the rehabilitation manager/supervisor, within 10 days from the submission of the secured creditor's motion, does not apply to the court with the request provided for by paragraph 1 of this article, the secured creditor is entitled to apply directly to the court, in accordance with Article 58 of this Law, with a request for the release from the moratorium and sale of the property used as the object of security. In this case, the rehabilitation manager/rehabilitation supervisor shall prove that the property in respect of which the creditor requests the cancellation of individual moratorium measures and sale is necessary for achieving the purpose of rehabilitation.

3. If the debtor has a secured contractual obligation relationship with a creditor (creditors), the term of which exceeds 5 years, and the debtor performs the current obligations arising from the said relationship, the claim arising from this relationship shall be satisfied by continuation of the existing contractual relationship, independently of the rehabilitation plan, except where this causes obvious harm to the creditor.

4. As a result of the release from the moratorium and sale of the property used as the object of security, all rights in rem over this property that are registered after the mortgage/pledge of the creditor carrying out its sale shall be extinguished.

5. If the property is encumbered by mortgage/pledge more than once, the proceeds from the sale of this property shall, in accordance with the procedure established by the legislation of Georgia, be directed to the satisfaction of secured claims, including secured tax claims.

Article 88. Things under conditional ownership🔗

1. The court is entitled, on the basis of an application by the rehabilitation manager/rehabilitation supervisor, to grant it, by a ruling, the right to dispose of property that is in the debtor's possession under a contract on conditional ownership and in respect of which the debtor enjoys all the rights of an owner.

2. The court shall issue the ruling provided for by paragraph 1 of this article only if it considers that the disposal of the property will contribute to achieving the purpose of rehabilitation, and also if the satisfaction of the claim arising from the contract on conditional ownership will be secured by the income received as a result of the disposal of this property.

3. The court is entitled to determine the minimum market value of the property provided for by this article, according to which the disposal of the said property shall be carried out.

Article 89. Appeal against the action of the rehabilitation manager/rehabilitation supervisor🔗

1. A creditor or partner of a debtor in the rehabilitation regime is entitled, by filing a claim, to appeal the action carried out within the scope of management powers by the rehabilitation manager/rehabilitation supervisor, if one of the following grounds exists:

a) the rehabilitation manager/rehabilitation supervisor carries out such an action or has carried out such an action which causes substantial harm to the claimant's interest independently and/or together with the common interests of other partners or creditors;

b) the rehabilitation manager/rehabilitation supervisor offers him to carry out such an action which will cause substantial harm to the claimant's interest independently and/or together with the common interests of other partners or creditors;

c) the rehabilitation manager/rehabilitation supervisor exercises his powers in bad faith.

2. The court is entitled to satisfy the claimant's claim and to instruct the rehabilitation manager/rehabilitation supervisor to carry out a specific action or to refrain from carrying it out.

3. It is inadmissible for the court to adopt the judgment provided for by paragraph 2 of this article, if this hinders or makes impossible the performance of the rehabilitation plan.

Article 90. Abuse of powers by the rehabilitation manager/rehabilitation supervisor🔗

1. The court is entitled, on the basis of an application of a creditor or a debtor, to consider and examine the issue of abuse of powers by the rehabilitation manager/rehabilitation supervisor.

2. The respective application must substantiate the presumption that the rehabilitation manager/rehabilitation supervisor, within the scope of the proceedings:

a) unlawfully used, retained in personal possession or unlawfully disposed of the debtor's money or other property;

b) breached a fiduciary obligation;

c) by abuse of powers committed an act provided for by the Criminal Code of Georgia.

3. If the court considers the existence of the ground provided for by paragraph 2 of this article to be confirmed, it is entitled to impose on the rehabilitation manager/rehabilitation supervisor:

a) return of the debtor's money or other property or other related liability;

b) payment of interest;

c) payment of a compensation amount (damages) in favour of the debtor for breach of a fiduciary obligation or abuse of powers.

4. In the presence of the ground provided for by subparagraph "c" of paragraph 2 of this article, the court applies to the respective investigative body and sends the relevant materials. For imposing liability on the said ground, confirmation of the commission of the act provided for by the same subparagraph by a guilty verdict that has entered into legal force is necessary.

Article 91. Termination of the Powers of the Rehabilitation Manager/Rehabilitation Supervisor🔗

1. The grounds for termination of the powers of the rehabilitation manager/rehabilitation supervisor are:

a) resignation of the rehabilitation manager/rehabilitation supervisor from office;

b) impossibility of the rehabilitation manager/rehabilitation supervisor to exercise powers;

c) dismissal of the rehabilitation manager/rehabilitation supervisor from office by the court;

d) death of the rehabilitation manager/rehabilitation supervisor;

e) termination of the authorisation of the insolvency practitioner;

f) completion of the rehabilitation regime.

2. The rehabilitation manager/rehabilitation supervisor may resign from office only with the consent of the court.

3. The court shall consent to the resignation of the rehabilitation manager/rehabilitation supervisor from office when the rehabilitation manager/rehabilitation supervisor is unable to perform his/her duties due to health condition or, in the case of the rehabilitation manager, a conflict of interests exists.

4. The rehabilitation manager/rehabilitation supervisor shall submit to the court an application for resignation from office not later than 10 working days before resignation from office.

5. The operation of this article shall not apply to a debtor under management, the matter of whose resignation or replacement is also regulated by the Law of Georgia on Entrepreneurs.

6. Termination or suspension of the authorisation of the insolvency practitioner automatically results in termination of the powers of the rehabilitation manager/rehabilitation supervisor. He/she shall immediately notify the creditors and the court thereof.

Article 92. Dismissal of the Rehabilitation Manager/Rehabilitation Supervisor from Office🔗

1. The court is entitled, where the grounds provided for by Articles 89 and 90 of this Law exist, to dismiss the rehabilitation manager/rehabilitation supervisor from office on the basis of an application of an interested person.

2. The creditors' meeting is entitled, not later than 30 days after the appointment of the rehabilitation manager/rehabilitation supervisor in accordance with Article 11 of this Law, to elect a new rehabilitation manager/rehabilitation supervisor by a majority of 2/3 of the creditors with voting rights present at the creditors' meeting. Upon the election of the new rehabilitation manager/rehabilitation supervisor, the powers of the rehabilitation manager/rehabilitation supervisor appointed by the court shall be terminated.

3. The operation of this article shall not apply to a debtor under management.

Article 93. Appointment of a New Rehabilitation Manager/Rehabilitation Supervisor🔗

In the event of termination of the powers of the rehabilitation manager/rehabilitation supervisor, the court, on the basis of an application of any interested person participating in the proceedings, shall appoint a new rehabilitation manager/rehabilitation supervisor in accordance with the procedure established by Article 11 of this Law.

Article 94. Completion of the rehabilitation regime🔗

1. The rehabilitation regime shall be completed upon entry into legal force of the ruling on approval of the rehabilitation plan.

2. The person having the authority to manage the debtor shall be obliged, after completion of the rehabilitation regime, to publish a report on the implementation of the rehabilitation plan once every 6 months.

Article 95. Conversion of the rehabilitation regime🔗

1. The rehabilitation regime shall be replaced by the bankruptcy regime if the rehabilitation plan was not approved in the manner established by this Law. In this case, the court shall appoint a bankruptcy manager in accordance with Article 11 of this Law.

2. The rehabilitation manager/rehabilitation supervisor shall be entitled, before approval of the rehabilitation plan, at any time to submit to the court an application on conversion if it considers that a reasonable probability of achieving the rehabilitation goal no longer exists.

3. For the submission of the application provided for by paragraph 2 of this Article by the debtor in possession, the consent of the rehabilitation supervisor shall be mandatory.

4. If the court considers the application submitted in accordance with paragraphs 2 and 3 of this Article to be substantiated, it shall grant it. The court shall be entitled, before deciding the said issue, to hear the parties.

5. In the case of conversion of the rehabilitation regime, the register of creditors approved within the framework of the rehabilitation regime, as well as all actions carried out by the rehabilitation manager, shall retain force for the purposes of the bankruptcy regime.

6. A ruling on granting the application on conversion may be appealed by way of a private complaint.

Article 96. Consequences of violation of the rehabilitation plan🔗

1. In the case of violation of the rehabilitation plan, a creditor shall be entitled to submit to the court an application on insolvency requesting the opening of the bankruptcy regime against the debtor.

2. An insignificant violation of the conditions provided for by the rehabilitation plan shall not be considered a violation of the rehabilitation plan. A violation of conditions shall be considered insignificant if it does not exceed 20 percent of the total current outstanding obligation, and its delay in performance — 15 working days, or if the delay does not exceed 7 working days, regardless of the amount of the debt.

3. The court shall send the application provided for by paragraph 1 of this Article, together with the attached evidence, to the debtor and shall set for it a period of not less than 4 days and not more than 7 days for submitting written opinions, which shall be counted from the moment of delivery of the letter to the debtor.

4. The court shall consider the application provided for by paragraph 1 of this Article within 10 days of its submission. In the case of scheduling an oral hearing, the debtor and creditors shall be notified of the time and place of the court hearing, but their failure to appear at the hearing cannot impede the court's consideration and decision of the said issue.

5. If the court considers the application submitted in accordance with paragraph 1 of this Article to be substantiated, it shall issue a ruling on the opening of the bankruptcy regime and shall appoint a bankruptcy manager.

Article 97. Essence of the Bankruptcy Regime🔗

The bankruptcy regime is implemented through the realization of the insolvency estate for the collective satisfaction of creditors' claims.

Article 98. Publicity in the Bankruptcy Regime🔗

1. No later than 2 working days from the issuance of the ruling on recognizing the application on insolvency as admissible and on opening the bankruptcy regime, the bankruptcy administrator shall publish information on the opening of the bankruptcy regime, as well as on the identity of the bankruptcy administrator (his/her identification data and contact information).

2. A change of the bankruptcy regime or a change related to the debtor under administration, as a change entered in the debtor's registration data, requires registration in the register of entrepreneurs and non-entrepreneurial (non-commercial) legal entities in accordance with the procedure established by the legislation of Georgia.

Article 99. Appointment of the Bankruptcy Administrator🔗

1. The bankruptcy administrator shall be appointed by the court by a ruling on recognizing the application on insolvency as admissible and on opening the bankruptcy regime, in compliance with the conditions established by Article 11 and paragraph 3 of Article 47 of this Law.

2. The creditors' meeting is entitled to appoint a new bankruptcy administrator in accordance with the procedure established by Article 92 of this Law.

3. Upon the appointment of the bankruptcy administrator, all persons authorized to manage and/or represent the debtor shall have the management and representative powers provided for by the Law of Georgia "On Entrepreneurs" suspended, except for the case provided for by paragraph 5 of this Article. Each such person shall be obliged, by decision of the bankruptcy administrator, in exchange for reasonable remuneration determined by the latter, to cooperate with the bankruptcy administrator and to assist him/her.

4. The person authorized to manage the debtor shall, within 15 days from the entry into legal force of the ruling on recognizing the application on insolvency as admissible and on opening the bankruptcy regime, submit to the tax authority the unsubmitted declarations corresponding to the complete/incomplete tax periods prior to the issuance of this ruling, and in the event of discovery of an error in the submitted tax declarations − make an appropriate amendment and/or addition to them in accordance with the procedure established by the tax legislation of Georgia.

5. The person authorized to manage the debtor shall retain the management authority in the bankruptcy regime only for the purpose of fulfilling the obligation provided for by paragraph 4 of this Article, to the extent of its fulfillment.

6. Failure to fulfill the obligation provided for by paragraph 4 of this Article shall result in the imposition of liability on the person authorized to manage the debtor in accordance with the procedure established by the legislation of Georgia, which shall not release him/her from the obligation to submit the tax declarations provided for by this Article.

Article 100. Rights and Obligations of the Bankruptcy Manager🔗

1. The bankruptcy manager shall locate property, verify the data on the property included in the insolvency estate, carry out the realization of the property included in the insolvency estate, and distribute the proceeds from the realization of the insolvency estate among the creditors. The bankruptcy manager shall perform his/her functions as quickly and efficiently as possible, taking into account the interests of the debtor's creditors as a whole, and shall not unjustifiably and without necessity cause harm to their interests.

2. In order to achieve the bankruptcy objective and perform the assigned obligations, the bankruptcy manager shall be guided by the Law of Georgia on Entrepreneurs and shall exercise all the powers conferred on a person authorized to manage, direct and represent the relevant business entity.

3. The bankruptcy manager shall have the right, in accordance with the procedure established by this Law, to:

a) apply to the court in order to ensure the convening and holding of a creditors' meeting and chair the creditors' meeting;

b) conduct litigation;

c) exercise avoidance;

d) ensure set-off of mutual claims;

e) ensure the satisfaction of claims arising against the debtor after the court has declared the application for insolvency admissible and issued a ruling on the opening of the bankruptcy regime, including tax obligations;

f) approve or terminate existing contracts and conclude new contracts;

g) purchase various professional services;

h) exercise other powers provided for by this Law.

4. The bankruptcy manager shall prepare a report on the debtor's financial condition and the selected form of realization of the property and shall publish it in accordance with the procedure established by this Law. Failure to fulfill this obligation shall result in the imposition of liability provided for by the legislation of Georgia.

5. The bankruptcy manager shall assess the property included in the insolvency estate. Creditors shall have the right to carry out an alternative assessment thereof at their own expense. In the event of disagreement, the bankruptcy manager shall make the relevant decision. Creditors shall have the right to raise the issue of replacing the bankruptcy manager and, for this purpose, convene a creditors' meeting.

Article 101. Realization of the insolvency estate🔗

1. The bankruptcy manager is entitled to carry out the realization of the insolvency estate in any form established by law for the realization of property, as a single complex or in parts.

2. When selecting the form of realization of property provided for by paragraph 1 of this Article, the bankruptcy manager must carry out its realization in the manner from which the recovery of a greater amount of money is expected.

3. The bankruptcy manager publishes a report on the selection of the form of realization of the property in accordance with the procedure established by this Law, no later than 10 days before its realization. A creditor is entitled, within 7 days from the publication of the said report, to propose to the bankruptcy manager an alternative form of realization of the property, which will be more beneficial for the body of creditors. The bankruptcy manager makes the decision on the form of realization of the property.

Article 102. Procedure and Conditions for Conducting an Auction🔗

1. If, in the case of sale of property included in the insolvency estate by other means, no greater amount is expected to be recovered, the bankruptcy manager shall carry out the sale of the said property by auction, in accordance with the procedure established by this Article.

2. At auction, property included in the insolvency estate may be sold, except for the object of financial collateral, the sale of which is carried out in accordance with the Law of Georgia on Financial Collateral, Netting and Derivatives.

3. The sale at auction of property included in the insolvency estate shall be carried out by the National Bureau of Enforcement.

4. The auction shall be conducted in accordance with the procedure and conditions established by the relevant Order of the Minister of Justice of Georgia, except for the special rules established by this Law.

5. The duration of the auction (the time from the start of the auction to its completion) shall not be less than 7 days and more than 10 days, unless a shorter time is established by the Order provided for by paragraph 4 of this Article.

6. The amount of the fee for the auction service of the National Bureau of Enforcement shall be determined by Order of the Minister of Justice of Georgia. The said service fee shall be reimbursed from the insolvency estate.

7. It shall be inadmissible to restrict the circle of persons participating in the auction or to impose other restrictions, except for cases directly provided for by the legislation of Georgia.

8. After the announcement of the auction, any person is entitled to apply to the National Bureau of Enforcement to receive additional information about the auction.

9. At the first auction, the starting price of property included in the insolvency estate shall be determined on the basis of an expert's opinion and shall be 75 percent of its market value. If the sale of the property at the first auction did not take place and its starting price is less than the creditors' claims, a creditor whose claim is covered by that property but does not exceed the starting price of the property put up for sale at the first auction shall have the right, within 10 days from the holding of the first auction, to apply to the bankruptcy manager with a request to transfer the property into ownership. In this case, the creditor shall be obliged to cover the claims of creditors of previous and same ranks and to attach to the said application a document confirming the deposit of funds into the relevant bank account of the National Bureau of Enforcement for the purpose of covering the claims of creditors of previous and same ranks. If there are applications from more than one creditor, the right to receive the property into ownership shall arise for the creditor whose application is accompanied by the documentation provided for by this paragraph and whose application was registered earlier than the applications of other creditors.

10. If the property included in the insolvency estate was not sold at the first auction, or if its transfer into ownership did not take place in accordance with the procedure established by paragraph 9 of this Article, a second auction shall be held within a period of not less than 10 days and not more than 40 days after the holding of the first auction. When the second auction is held, it shall be indicated that it is being held for the second time. At the second auction, the starting price of the property included in the insolvency estate shall be 50 per cent of its market value, except where, not later than the 10th day after the holding of the first auction, the bankruptcy manager requests the National Bureau of Enforcement to increase the starting price of this property to not more than 65 per cent of its market value.

11. If the property included in the insolvency estate was not sold at the second auction, a third auction shall be held within a period of not less than 10 days and not more than 40 days after the holding of the second auction. At the third auction, the starting price of the property included in the insolvency estate shall be half of its starting price at the second auction.

12. If the property included in the insolvency estate was not sold at the third auction, the court, on the basis of information provided by the National Bureau of Enforcement, shall publish in the electronic system an offer to the creditors of the property regarding its transfer into common ownership. The said property shall be transferred into the ownership of those creditors who, within 10 calendar days after the publication of this offer, submit an application for the receipt of the property into ownership. This property shall be transferred to the creditors in kind, at market value, in accordance with Article 104 of this Law. The share of the creditors in the common ownership shall be determined in proportion to their claims. The share of those creditors who do not express a desire to receive the said property into ownership shall be distributed equally among the other creditors. If none of the creditors submits an application for the receipt of the property into ownership within the established period, this property shall be transferred to the partners in proportion to their share, and in the case of a limited partnership — to the general partners of the limited partnership in proportion to their share.

13. If property subject to registration under the legislation of Georgia is not registered as the debtor's ownership, the bankruptcy manager shall, before the announcement of the auction, apply to the registering body for the purpose of registering this property. In the event that the debtor's ownership right over property subject to registration is not established, the bankruptcy manager shall apply to the relevant registering body, and in the absence of such a body — to the court, for the purpose of recognising the debtor's ownership right over this property. On the basis of the said application, the court shall issue a ruling, which shall be the basis for the registration, in accordance with the procedure established by the legislation of Georgia, of the property in the debtor's possession.

14. The person who wins the auction shall pay the price of the property in full within 10 days after the completion of the auction, and if the price of the property exceeds GEL 1,000,000 — within 20 days after the completion of the auction. Thereafter, the National Bureau of Enforcement shall issue an order on the right of ownership over the property acquired at the auction.

15. If the person who won the auction has not paid the price of the property within the period established by paragraph 14 of this article, he/she loses the amount submitted as a guarantee on the day of the auction. This amount shall be transferred into the ownership of the National Bureau of Enforcement. The National Bureau of Enforcement shall issue an order on annulment of the result of the conducted auction and, within 10 days from the issuance of this order, shall conduct a new auction, which shall not be considered a repeat auction.

16. As a result of the transfer into the ownership of the acquirer of the property, including the recipient in kind under the procedure established by this article, all attachments existing on the said property, as well as rights in rem and rights of obligation, shall be extinguished, except where the retention of rights in rem and rights of obligation is directly provided for by law, which must be indicated in the information on the conduct of the auction.

Article 103. Distribution of amounts received from the insolvency estate in the course of insolvency proceedings🔗

The bankruptcy manager is entitled, before the completion of the bankruptcy regime, at any time, to satisfy the creditors' claims in accordance with Article 104 of this Law, from the amounts received as a result of the piecemeal realisation of the property in the debtor's ownership and/or the insolvency estate as at the moment of the commencement of the insolvency proceedings.

Article 104. Rule for Distribution of the Insolvency Estate🔗

1. In the event of the debtor’s bankruptcy, the insolvency estate shall be distributed in the following sequence:

a) bankruptcy regime expenses:

a.a) procedural expenses provided for by Chapter V of the Civil Procedure Code of Georgia;

a.b) remuneration of the bankruptcy administrator;

a.c) expenses related to the proceedings, including expenses arising from employment relations arising in the course of bankruptcy proceedings, property management expenses, as well as expenses for various professional services purchased by decision of the administrator;

b) debts incurred by the debtor after the court declares the application for insolvency admissible and issues a ruling on opening the bankruptcy regime, including tax obligations arising after the commencement of bankruptcy proceedings;

c) groups of creditors − in the following sequence:

c.a) preferential claims;

c.b) preferential tax claims;

c.c) unsecured claims, including the amount of taxes arising before the application for insolvency is declared admissible, which are not covered by other subparagraphs of this paragraph;

c.d) claims arising in the form of interest and fines accrued on obligations existing before the application for insolvency is declared admissible, administrative fines and other monetary obligations arising from administrative offences, fines and penalties accrued in accordance with the Tax Code of Georgia;

c.e) non-privileged claims;

c.f) obligations arising from corporate relations (payment of dividends, redemption of shares, return of contribution).

2. The insolvency estate shall be distributed in compliance with the principle of proportionality. The claims of creditors of each subsequent rank shall be satisfied after the claims of creditors of the previous rank have been satisfied in full, unless another change is provided for by the agreement of all creditors affected by that change.

3. The undistributed amount remaining after the bankruptcy of the enterprise shall be distributed among the debtor’s partners in proportion to their shares, unless otherwise provided by its charter or an agreement existing between its partners.

4. A creditor shall have the right, in exchange for partial waiver of a claim, to request preferential satisfaction compared to the creditors of its group. For this purpose, the consent of all creditors with whom the said creditor should have received satisfaction on an equal footing is required, as well as the consent of all creditors with whom it requests satisfaction on an equal footing.

Article 105. Procedure for the satisfaction of secured creditors🔗

1. A first-priority secured creditor is entitled to apply to the bankruptcy manager with a request for the realisation of the secured property in the manner provided for by the mortgage/pledge contract. The bankruptcy manager shall ensure the realisation of the said property in accordance with the request of the first-priority mortgagee/pledgee, except for the case provided for by paragraph 2 of Article 102 of this Law.

2. If, in the case of realisation of a thing used as the object of security, the amount received from its realisation exceeds the claim of the first-priority creditor, the claim of each subsequent-priority secured creditor registered on the same thing shall be satisfied from the excess amount in accordance with the procedure established by the Civil Code of Georgia, and the remaining amount shall be directed to the insolvency estate.

3. In accordance with the Tax Code of Georgia, in the case of realisation of property encumbered by a measure securing the collection of a tax debt, satisfaction from the amount received from the realisation shall be effected in accordance with the order of registration of the security measure (including a measure securing the collection of a tax debt).

4. On the basis of the claim of a secured creditor whose claim could not be satisfied due to the insufficiency of the amount received from the realisation of the object of security in accordance with this Article, the unsatisfied part of the claim shall be reflected in the rank of unsecured claims, in accordance with paragraph 2 of Article 276 and paragraph 1¹ of Article 301 of the Civil Code of Georgia.

Article 106. Completion of bankruptcy proceedings and termination of the bankruptcy regime🔗

1. Bankruptcy proceedings are in fact completed upon the sale by the bankruptcy manager of the property included in the insolvency estate and the distribution of the proceeds from the sale in accordance with this Law.

2. The bankruptcy regime shall be terminated if the court, as a result of granting a private complaint, annuls the ruling on recognizing the insolvency application as admissible and opening the bankruptcy regime.

3. After the sale of the property, the bankruptcy manager shall, within a reasonable time but not later than 15 days, draw up the debtor's bankruptcy report and submit it to the creditors and the court. The said report must contain a justification for achieving the objectives established by law within the relevant bankruptcy proceedings.

4. On the basis of the bankruptcy manager's report, the court shall issue a ruling on the completion of the bankruptcy proceedings and the cancellation of the enterprise's registration in the Register of Entrepreneurs and Non-Entrepreneurial (Non-Commercial) Legal Entities, except when the property was sold as a going concern and its acquirer was registered as a partner of the enterprise. In this case, the court shall issue a ruling on the completion of the bankruptcy proceedings.

5. If, after the completion of the bankruptcy proceedings, property is discovered that belonged to the debtor and which had not previously been known, the court shall notify all creditors whose claims were not fully satisfied in the course of the bankruptcy proceedings thereof, and if it is impossible to provide the information to all creditors or their number exceeds 15, the court shall publish this information in the electronic system. A creditor whose claim has not been fully satisfied shall be entitled, within 15 days from the receipt/publication of the said information, to apply to the National Bureau of Enforcement requesting the sale of the property by auction. The National Bureau of Enforcement shall ensure the sale of the property in accordance with the procedure established by Article 102 of this Law. The court shall distribute the amount received from the sale of this property among those creditors who submitted their claims within the established time limit, in accordance with their priority. If a creditor does not apply to the National Bureau of Enforcement within the established time limit, or the property is not sold at auction, or the creditor refuses to receive the property in kind, this property shall be distributed among the debtor's partners in proportion to their shares.

Article 107. Conversion of bankruptcy proceedings🔗

1. The bankruptcy manager is entitled to file an application with the court requesting the opening of a rehabilitation regime.

2. Together with the bankruptcy manager's application requesting the opening of a rehabilitation regime, in addition to the documents provided for by Article 44 of this Law, the following shall also be submitted:

a) detailed information on the bankruptcy regime as of the date of filing the application, the date of appointment of the bankruptcy manager, his/her identification data and contact information;

b) information on the reasons on the basis of which it was considered expedient to file the application requesting the opening of the rehabilitation regime;

c) any other information which, in the bankruptcy manager's opinion, will facilitate the court in deciding the issue of conversion of the bankruptcy proceedings.

3. If the application provided for by paragraph 1 of this Article is granted, the court shall be guided by the procedures established by this Law for declaring admissible the application filed with the court requesting the opening of a rehabilitation regime and for opening the rehabilitation regime, including deciding issues related to the moratorium.

Article 108. Rules applicable to a debtor with special regime status🔗

The rules established by this Law shall apply to a debtor with special regime status, taking into account the specificities defined by this Chapter.

Article 109. Granting of special regime status🔗

1. The court shall grant special regime status to a debtor on its own initiative or on the basis of a reasoned application of any interested person. Granting of special regime status shall be permissible at any stage of the insolvency proceedings.

2. When granting special regime status to a debtor, the court shall assess the risks of causing substantial harm to the state interest and/or the public interest that may be caused by the suspension/termination of the debtor's activity or by the performance of individual procedural actions in the course of the insolvency proceedings.

3. The court shall consider the application on granting special regime status to a debtor within 5 days and shall issue a reasoned ruling.

4. If, in the course of the insolvency proceedings, it turns out that the circumstances which served as the basis for issuing the ruling on granting special regime status to the debtor no longer exist, the court is entitled, on its own initiative or on the initiative of any interested person, which must be reasoned, to revoke the special regime status from the debtor. Before revoking the special regime status from the debtor, the court shall hear the person on whose application the special regime status was granted to the debtor.

Article 110. Realisation of the property of a debtor with special regime status🔗

1. The realisation of the property of a debtor with special regime status shall be carried out in the form of a single complex or in another form that does not impede the preservation of the continuity of its activity.

2. In the event of the realisation of the property of a debtor with special regime status, a change in the profile of activity of its acquirer shall not be permitted. The acquirer of this property assumes the obligation to continue the activity that the bankrupt debtor was carrying out.

3. The bankruptcy manager shall have the right, when realising the property of a debtor with special regime status, to establish other conditions the purpose of which is to ensure the preservation of the debtor's activity profile. This shall be indicated before the realisation of the said property, for the purpose of providing complete information to its potential acquirer.

Article 111. Contract relating to immovable property🔗

In the course of insolvency proceedings conducted in accordance with this Law, a contract relating to immovable property which concerns a right in rem over immovable property or a right to use immovable property shall be governed by the legislation of the country where that immovable property is located.

Article 112. Regulation of employment relations🔗

Labour law issues raised in the course of insolvency proceedings conducted in accordance with this Law, including issues relating to employment, shall be governed by the legislation of the country that regulates the relevant employment relation.

Article 113. Set-off🔗

The opening of insolvency proceedings shall not affect the creditor's right of set-off if, in accordance with the legislation applicable to the debtor's claim, the creditor had the right of set-off at the time of the opening of the insolvency proceedings.

Article 114. Exercise of creditor's rights🔗

1. A creditor shall be entitled to register/establish its claims against a single debtor simultaneously in insolvency proceedings conducted in different countries.

2. The manager/rehabilitation supervisor shall be entitled to register a claim recorded in the creditors' register in the insolvency case in its proceedings also within the framework of insolvency proceedings conducted in a foreign country in respect of the same debtor, if the legislation of that country so provides. The creditor shall be entitled to refuse such registration from the outset or to revoke it later.

3. The manager/rehabilitation supervisor shall be entitled, on behalf of the creditor, to exercise the right to vote arising from a claim registered in a foreign country in accordance with paragraph 2 of this Article, unless the creditor itself takes a different decision.

Article 115. Obligation of the creditor to return what was received🔗

1. If a creditor participating in insolvency proceedings conducted in Georgia, in order to satisfy his claim, obtains a benefit through enforcement at the expense of those assets of the insolvency estate which are not located in Georgia, as well as through payment or otherwise by the debtor, he shall transfer to the administrator/rehabilitation supervisor/supervisor of the regulated agreement what he received. In this case, the norms provided for by the Civil Code of Georgia on unjust enrichment shall apply.

2. A creditor participating in insolvency proceedings conducted in Georgia shall, upon request by the administrator/rehabilitation supervisor/supervisor of the regulated agreement, provide him with information on his receipt of satisfaction of any kind.

Article 116. Recognition of a decision on the opening of insolvency proceedings opened in a foreign country🔗

1. A decision of a competent body on the opening of insolvency proceedings in a foreign country, which concerns immovable property existing in Georgia and/or creditors, shall be recognised in accordance with the procedure established by the Law of Georgia "On Private International Law" for the recognition in Georgia of a court decision of a foreign country that has entered into legal force.

2. In addition to the general grounds established by the Law of Georgia "On Private International Law", recognition of a decision on the opening of insolvency proceedings in a foreign country shall be inadmissible if the result of its recognition would be clearly contrary to the fundamental aims and principles established by the legislation of Georgia for insolvency proceedings.

Article 117. Bankruptcy of a foreign enterprise🔗

1. For the purposes of this Article, an unregistered enterprise is an entrepreneurial legal entity of a foreign country which is not an entrepreneurial legal entity registered in Georgia in accordance with the Law of Georgia “On Entrepreneurs”, or its branch. The legislation of the country where this entrepreneurial legal entity is registered shall apply to the registration procedures of an unregistered enterprise.

2. The bankruptcy of an unregistered enterprise may be carried out by a court of Georgia on the basis of this Law. For the purposes of determining the jurisdiction of a court of Georgia, an unregistered enterprise shall be considered an enterprise registered in Georgia if its centre of main interests is in Georgia or it owns property in Georgia. For the purposes of the bankruptcy proceedings of an unregistered enterprise, the principal place of activity of the said enterprise or the address of the property shall be considered the registered address of this enterprise.

3. If insolvency proceedings are pending against it in the country of registration of the unregistered enterprise, the notice of the decision to open insolvency proceedings in a foreign country does not preclude the opening of separate insolvency proceedings in Georgia in accordance with this Article.

4. Separate insolvency proceedings may be opened on the basis of an application of the unregistered enterprise or a creditor. At the same time, if the debtor does not have a branch or address registered in Georgia, territorial (local) insolvency proceedings may be opened on the basis of a creditor's application only if the creditor has a particular interest in the territorial (local) insolvency proceedings, namely, if it is presumed that its position will deteriorate through the insolvency proceedings pending in the foreign country. The obligation to substantiate the existence of a particular interest shall be borne by the applicant creditor.

5. An unregistered enterprise may, in accordance with this Law, be declared bankrupt where, under the conditions established by this Law, its insolvency is evident.

6. An enterprise registered in a foreign country which carried on entrepreneurial activity in Georgia may be declared bankrupt as an unregistered enterprise, on the basis of this Law, also in the case where the said enterprise was liquidated in the country of its registration, was removed from the relevant register or otherwise ceased to exist.

7. The application of the provisions of this Chapter to an unregistered enterprise does not restrict the application of other provisions of this Law on the bankruptcy regime.

8. The court and/or the bankruptcy manager is entitled, for the purpose of managing an unregistered enterprise, to carry out in respect of it any action which may be carried out in respect of an enterprise registered in accordance with the Law of Georgia “On Entrepreneurs”.

Article 118. State Fee🔗

1. When submitting an application to initiate insolvency proceedings, the amount of the state fee payable is 3 percent of the value of the insolvency estate, but not less than 500 GEL and not more than 10,000 GEL. The state fee shall be calculated at the stage of determining the insolvency estate. If, during the course of the insolvency proceedings, the insolvency estate was assessed more than once, the state fee shall be calculated according to the latest assessment.

2. When submitting an application to initiate insolvency proceedings, the debtor shall not pay the state fee, except in the case provided for by paragraph 5 of this Article. After calculation of the state fee, its amount shall be included in the procedural costs and, in the event of bankruptcy, shall be covered from the insolvency estate, while in the event of rehabilitation — in accordance with the rehabilitation plan.

3. When submitting an application to initiate insolvency proceedings, the creditor shall pay the state fee in the amount of 3 percent of the value of the claim, but not less than 500 GEL and:

a) not more than 5,000 GEL, if the applicant is a natural person;

b) not more than 10,000 GEL, if the applicant is a legal entity.

4. The state fee paid by the creditor is a procedural cost and it shall be reimbursed in accordance with the procedure established by this Law. If the state fee paid by the creditor is less than the state fee payable in accordance with paragraph 3 of this Article, the difference shall be covered from the insolvency estate. If the state fee paid by the creditor is more than the state fee payable in accordance with paragraph 3 of this Article, the difference shall be returned to the creditor.

5. In the case of submission of a proposal to conclude a regulated agreement, the amount of the state fee is 1,000 GEL, which the applicant shall pay when submitting the application for insolvency proceedings. This rule shall also apply if the regulated agreement was approved and performed within the framework of ongoing insolvency proceedings on the basis of an application to initiate insolvency proceedings.

6. If the creditor's application to initiate insolvency proceedings was declared inadmissible, 70 percent of the amount of the state fee paid shall be returned to the creditor.

7. If the applicant withdrew the application to initiate insolvency proceedings before it was declared admissible, the state fee paid shall be returned to the applicant in full.

8. In the case of approval of the rehabilitation plan, the amount of the state fee shall be halved.

Article 119. Rule for remuneration of the activity of an insolvency practitioner🔗

1. Unless otherwise provided by the legislation of Georgia, the court determines (approves) the amount of reasonable remuneration payable for the activity of an insolvency practitioner for services rendered by him in the course of insolvency proceedings, as well as the procedure for reimbursement of necessary expenses incurred by the insolvency practitioner. The activity of an insolvency practitioner shall be remunerated from the insolvency estate.

2. Before completion of the insolvency proceedings, an insolvency practitioner shall submit to the court for approval a report on the remuneration to be received. This report shall exhaustively describe all services rendered by him and their values.

3. The court is entitled to:

a) reduce the remuneration requested by the insolvency practitioner if he cannot substantiate its reasonableness and necessity;

b) on the basis of a motion by the insolvency practitioner, determine his remuneration in an amount greater than that established by paragraph 7 of this Article, if the insolvency practitioner substantiates the necessity and reasonableness of additional services rendered by him;

c) on the basis of a motion by the insolvency practitioner, establish payment to him of an amount payable in advance as an advance or reimbursement of the value of services rendered, which shall not exceed half of the amount of the final remuneration payable for his activity.

4. When determining the amount of remuneration for the activity of an insolvency practitioner, the court assesses the content and volume of services rendered by him and takes into account the following circumstances:

a) time spent on rendering services;

b) the tariff established for rendering services;

c) the necessity of the services for the insolvency proceedings;

d) whether the service was rendered within a reasonable time, taking into account the essence, complexity and importance of the problem, issue or task;

e) whether the remuneration is reasonable compared to the market value established for services of the same type and quality (rendered by a professional of the same level).

5. The court shall not approve a claim for reimbursement of the cost of services rendered by an insolvency practitioner if:

a) it establishes that the rendering of the services was not necessary for the insolvency proceedings, or considers the amount of remuneration unjustified;

b) before incurring the expense, there were grounds for a reasonable assumption that the rendering of the services would not bring benefit to the insolvency estate.

6. The total amount of reasonable remuneration determined for the activity of an insolvency practitioner, including in the case of appointment of several administrators, shall be calculated according to the amount of obligations performed. The amount of obligations performed shall be considered to be:

a) in the case of approval of a rehabilitation plan − the total amount determined by the rehabilitation plan;

b) in the case of bankruptcy − the total amount recovered.

7. The total amount of reasonable remuneration determined for the activity of an insolvency practitioner, including in the case of the appointment of several managers, shall be calculated as follows:

a) in the case of fulfilled obligations of up to GEL 5,000 — not more than 30 per cent of the fulfilled obligations;

b) in the case of fulfilled obligations from GEL 5,000 to GEL 50,000 — not more than 20 per cent of the fulfilled obligations;

c) in the case of fulfilled obligations from GEL 50,000 to GEL 500,000 — not more than 10 per cent of the fulfilled obligations;

d) in the case of fulfilled obligations from GEL 500,000 to GEL 2,000,000 — not more than 5 per cent of the fulfilled obligations;

e) in the case of fulfilled obligations from GEL 2,000,000 to GEL 5,000,000 — not more than 3 per cent of the fulfilled obligations;

f) in the case of fulfilled obligations exceeding GEL 5,000,000 — not more than 1 per cent of the fulfilled obligations.

8. The remuneration of the manager/rehabilitation supervisor shall be calculated independently and summed for each indicator of the value of the insolvency estate provided for by paragraph 7 of this article.

Article 120. Activity of an insolvency practitioner🔗

1. Participants in insolvency proceedings during the last 5 years before the entry into force of this Law who have performed the functions of a bankruptcy/rehabilitation manager provided for by the Law of Georgia "On Insolvency Proceedings" shall, within 1 year from the entry into force of this Law, be considered insolvency practitioners and shall have the right to carry out the respective activity.

2. After the expiry of the term established by paragraph 1 of this article, the respective persons shall exercise the powers of an insolvency practitioner if they satisfy the requirements determined by order of the Minister of Justice of Georgia for the authorisation of an insolvency practitioner.

Article 121. Extension of the operation of the Law to ongoing insolvency cases🔗

1. This Law shall apply only to those insolvency cases in which applications on insolvency are submitted after the entry into force of this Law.

2. Insolvency proceedings commenced before the entry into force of this Law shall continue in accordance with the Law of Georgia "On Insolvency Proceedings".

Article 122. Measures to be implemented in connection with the entry into force of the Law🔗

1. Within 2 months from the publication of this Law, the Minister of Justice of Georgia shall ensure the approval of the normative acts provided for by Article 11 of this Law.

2. The Ministry of Justice of Georgia shall, before the full entry into force of this Law, ensure the creation and functioning of the electronic system provided for by Article 19 of this Law.

3. Upon the full entry into force of this Law, the Law of Georgia of 28 March 2007 "On Insolvency Proceedings" (Legislative Herald of Georgia, No 9, 31 March 2007, Art. 87) shall be declared invalid.

Article 123. Entry into force of the Law🔗

1. This Law, except for Articles 1–121 of this Law, shall enter into force upon publication.

2. Articles 1–121 of this Law shall enter into force from 1 April 2021.

President of Georgia Salome Zourabichvili

Tbilisi,

18 September 2020

N7165-Is