Justice Minister Tsulukiani speaks of new bankruptcy legislation

The Minister of Justice of Georgia Tea Tsulukiani presented to the media Bankruptcy Legislation and the details of the draft law after the government session this Thursday. As she noted, the new law will replace the insolvency law in Georgia, commonly known as “bankruptcy law.”

The new law is called the Law of Georgia on Rehabilitation and Collective Satisfaction of Creditors, with dozens of accompanying projects in the package, and the main purpose of the reform is to create economically sound legal frameworks so that the company facing the problems can be rehabilitated. According to the justice minister, the goal should not be the bankruptcy of the company, but its survival and protection of the interests of the debtor, as well as the rights of employees and creditors throughout the process.

According to her, there are many innovations in this bill, including procedures outside the court. As Tsulukiani said the concept of an insolvency practitioner is introduced into the law and non-professionals are prohibited from participating in the process, though there will be a transitional period for those who work in the field today, though they are not highly qualified. According to the Minister, it will be important that the Ministry of Justice develops an electronic system, which will randomly select one of the practitioners to be in charge of the procedure.

According to the Justice Minister’s information, the draft law stipulates that before the company is declared insolvent, the institution of a regulated agreement enters, and in the event of a court ruling it’s the court's power to declare or not to declare payment admissible; if admissible, it should open rehabilitation or bankruptcy regime. The law will also allow conversion between regimes.

Tsulukiani said that this bill is important because it will enable reforming the mass of bankruptcy. She noted that the ministry of justice and the ministry of finances took several months to negotiate on these innovations. She also informed, that according to the joint decision, the National Bureau will no longer be involved in the insolvency process, rather, insolvency practitioners will rule the process under court procedures.

She also emphasized the compromise of the Ministry of Finance- “it is a revolutionary step” she said, explaining that the Revenue Service will not become the primary creditor as it is now, but will become a regular one. Tsulukiani noted that all parties involved will have short deadlines for action.

Soso Pkhakadze, President of the Business Association of Georgia (BAG) welcomed the changes to the bankruptcy law announced by the government. The businessman said that Georgia's business association was also involved in drafting the legislation and had its own remarks that were taken into account by the authorities.

He also noted that the largest association – BAG didn’t like the previous legislation and has been pushing for a new bill for months. “If adopted, it will bring much good to the economy and business,” he added.