Bankruptcy Rules and Regulations in Iran
Bankruptcy Rules and Regulations in Iran consists of two main laws: the code of commerce law and the act of administration of the bankruptcy. There are also a number of crimes relevant in this context, which may result from certain cases of faults and frauds.
General Terms of Bankruptcy in Iran
As anywhere else, in Iran merchants get bankrupt because they can’t pay back their debts anymore. The process is the same for the individuals and corporations. According to the article 412 of the Code of Commerce Law, bankruptcy of a merchant could be declared up to the one year after her death. When the merchant declared bankrupt, she loses her control over her properties and liquidator takes her seat, as to clear her debts (article 418). All debts not yet due, will be accelerated and proportionally reduced (article 421).
Who can Apply to Bankrupt a merchant?
Article 415 states that the courts of first instance will proceed to declare bankruptcy of a merchant upon the request of:
- The businessman himself;
- The public attorney;
- The creditors.
Before Liquidation Process
The preliminary proceedings shall be done before the liquidation starts. First of all, the court will nullify all transactions detriment to the benefits of the creditors, as authorized in the articles 423 to 426. Then, an observer shall be assigned to record the properties of the bankrupt merchant and keep them under lock and key (article 433).
Immune Properties from Distraint
The note under the article 439 indicates to the immune properties from distraint, but doesn’t articulate them. article 24 of the Law on the Manners of Execution of the Financial Convictions enumerates immune properties among them are noticeable items like business and work tools and house. Nevertheless, one should know the stores and other precious items will not be considered as work tools, even though they are necessary means for running a business. Houses, even average ones, may be uncategorized as immune properties from distraint if the bankrupt merchant or her family are not dwelt in it and have rented somewhere else. Article 447 also provides that the merchant may provide for his family a livelihood by using her seized properties, in the face of no other alternative to make a living.
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