The Grounds For Declaring Bankruptcy And The Features Of Insolvency In The Republic Of Armenia

In the Republic of Armenia, the main law regulating the process of bankruptcy is the RA Law "On Bankruptcy" adopted on December 25, 2006.

1. The Law of the Republic of Armenia "On Bankruptcy" stipulates that a bankruptcy application may be submitted either on a person's initiative (voluntary bankruptcy application) or at the creditor's request (forced bankruptcy application).

In accordance with the law, insolvency is deemed as a basis for either voluntary or forced bankruptcy.

The debtor may be declared bankrupt based on the court's decision:

1.1 On the basis of an application on forced bankruptcy, if the latter has committed a 90-day or more delay in undisputed payment obligations exceeding two-thousand fold of the minimum salary stipulated by law (AMD 2,000,000), and the said delay continues at the time of adopting a judgment (de facto insolvency).

The payment obligation shall be deemed undisputed in case the debtor fails to object against it, or in case he/she objects against the said obligation, but:

1. the payment obligation is recognized following a decision or judgment that has entered into legal force, and there is no possibility for set-off;
2. the claim is based on a written deal, and the debtor fails to prove that he/she has sufficient grounds to object against the given claim (including offsetting the claim);
3. the claim arises out of the debtor's obligation to pay taxes, duties, and other charges stipulated by law, and the debtor fails to prove that he/she has sufficient grounds to object against the given claim (including offsetting the claim);
4. the uncontested part of the claim exceeds two-thousand fold of the minimum salary established by law;

The debtor, on his/her initiative:

1. In case the debtor's liabilities exceed the price of the debtor's assets by two-thousand fold of the minimum salary stipulated by law (AMD 2,000,000) or more, in the case of a legal entity, based on the accounting rules, in the case of an individual, based on the valuation standards (balance sheet insolvency). The value of assets shall not include the value of assets that cannot be seized by law.
2. If the debtor's obligations to be fulfilled by public legal monetary claims exceed the value of the debtor's assets, in the case of a legal entity, based on the accounting rules, in the case of a natural person or individual entrepreneur, based on the valuation standards (balance sheet insolvency). The value of assets does not include the value of assets that cannot be subject to confiscation by law.

2. The debtor has the right to apply to the court in case of anticipated bankruptcy, when it is obvious that the grounds for recognizing the debtor's own bankruptcy will arise.

3. In the presence of any of the above grounds, the debtor or the creditor can start the process of declaring the debtor bankrupt by submitting an application in accordance with the law "On Bankruptcy".

4. In the Republic of Armenia, individuals and legal entities, including foreign residents, can be declared bankrupt, except for: the Republic of Armenia, the municipality, the Central Bank of the Republic of Armenia, a bank, a credit organization, an investment company, an investment fund manager, an insurance company.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.