Existing user? Sign in
Share your needs with us, get contacted by law firms.
Free. Takes 2 min.
Restructuring and insolvency law covers the legal processes used when individuals, companies, or other entities cannot meet their financial obligations as they come due. In Arak - an industrial and commercial center in Markazi Province - these matters commonly arise in manufacturing, trading and contracting businesses. The legal framework blends principles from Iran's Civil Code, Commercial Code, Companies Law and specialized court procedures. Insolvency outcomes typically include negotiated restructuring, court-supervised reorganization, appointment of a trustee or receiver, or judicial liquidation and sale of assets. Local courts and enforcement offices in Arak administer the processes, and outcomes are shaped by priorities among creditors - for example secured creditors, employee claims and tax authorities.
- You are a business facing mounting debts and need to assess whether to restructure, negotiate with creditors or begin insolvency proceedings.
- You are a creditor seeking to enforce a judgment, recover a debt, or protect secured collateral.
- You are an employee or contractor whose employer may become insolvent and you need advice on wage claims and priority.
- You are a company director or manager worried about personal liability for wrongful trading, preference payments or other obligations when the business is distressed.
- You need to prepare or review a composition agreement or restructuring plan and present it to creditors or the court.
- You need assistance with enforcement actions - for example attachment, public auction of assets, or recognition of foreign judgments or claims.
- You are a foreign investor, supplier or creditor needing help with cross-border enforcement, local procedure or compliance with Iranian requirements.
- Legal framework - Insolvency and restructuring in Iran are governed by a combination of general civil and commercial laws, the Companies Law for corporate entities, labor and tax statutes and procedural rules administered by the judiciary. Specialized rules apply to banking and financial institutions.
- Courts and authorities - Commercial and civil courts in Arak handle disputes, with enforcement offices executing judgments. In bankruptcy matters courts may appoint trustees or receivers to manage and liquidate assets or supervise restructuring.
- Secured transactions - Secured creditors who hold mortgages or pledges on assets generally have priority over unsecured creditors. Proper registration and perfection of security interests affects enforcement rights.
- Creditor priorities - Wages and certain employment-related claims often enjoy priority. Tax claims and secured debts rank ahead of many unsecured creditors, though exact priorities depend on the nature of claims and applicable law.
- Restructuring options - Parties commonly attempt out-of-court negotiations or mediated agreements first. If those fail, court-supervised procedures may allow for composition agreements or reorganization under judicial oversight, subject to creditor approval and court confirmation.
- Appointment of trustees - Where the court finds insolvency, it can appoint an administrator, trustee or liquidator to take control of assets, investigate affairs, and oversee distribution according to priority rules.
- Enforcement and liquidation - Asset liquidation typically proceeds by public auctions under judicial supervision, with proceeds distributed to creditors according to legal priority. The process is regulated by procedural law and enforcement office practice.
- Employee protections - Labor law provisions protect employee wage claims and social security contributions, which often receive preferential treatment in insolvency distributions.
- Time limits and procedural steps - Insolvency and enforcement processes follow statutory timelines and procedural requirements - for filing claims, appealing court orders and completing auctions. Missing deadlines can affect rights, so timely legal advice is important.
Insolvency describes the financial situation where liabilities exceed assets or when a debtor cannot pay debts as they fall due. Bankruptcy is the formal legal process that a court may open to address insolvency - it can lead to a supervised reorganization or liquidation.
Key indicators include repeated defaults on payments, inability to pay suppliers or employees, overdue loan installments, creditor enforcement actions, or cash flow projections showing sustained shortfalls. A lawyer or accountant can perform a solvency test and advise on options.
Yes - in many cases a business can continue to operate while negotiating a restructuring or under court supervision. That may allow preservation of value and better outcomes for creditors, but it also creates risks for directors if trading increases creditor loss without reasonable prospect of recovery.
Employees generally have prioritized claims for unpaid wages and may be able to recover some amounts from the estate of the insolvent employer ahead of unsecured creditors. Social security and severance obligations are subject to special rules and priority in distribution.
Secured creditors usually retain enforcement rights over their collateral. Depending on registration and perfection, a secured creditor may realize its security by enforcement or sale and recover from the proceeds before unsecured claims are paid.
Yes - a creditor with a legitimate claim can petition the competent court to declare a debtor bankrupt if legal requirements are met. Courts will consider evidence of insolvency and follow procedural rules before opening bankruptcy proceedings.
Yes - out-of-court workouts, negotiated repayment plans, debt compromises and mediation are commonly used. These options can be faster and less costly than formal insolvency, but they require creditor cooperation and careful documentation.
When appointed by the court, a trustee or receiver takes control of the debtor's assets, manages operations if necessary, investigates the financial affairs, and oversees realization and distribution of assets to creditors according to the law.
Directors can face liability if they have breached duties, engaged in fraudulent or preferential transactions, or continued trading recklessly when insolvency was imminent. Early legal advice helps directors understand and manage exposure.
Look for lawyers or firms with experience in commercial litigation, bankruptcy, corporate restructuring and creditor enforcement. Check membership in the Iran Bar Association, ask for client references, review case experience, and confirm language capabilities and fee structure before hiring.
- Markazi Province Judiciary - Commercial and civil courts handle insolvency and enforcement matters in Arak.
- Execution Offices in Arak - administer enforcement of judgments and public auctions.
- Arak Chamber of Commerce - useful for business-related assistance, mediation contacts and local business support.
- Iran Bar Association and local bar branches - directories of licensed lawyers and legal guidance.
- Ministry of Cooperatives, Labour and Social Welfare - for employee claims, labor rights and related procedures.
- Tax Administration of Iran - administers tax claims and procedures relevant in insolvency.
- Central Bank of Iran - relevant where banking claims, loan restructuring and supervised settlements are involved.
- Local accounting and insolvency practitioners - for valuation, forensic accounting and business reorganization support.
- Gather documentation - assemble financial statements, bank statements, contracts, loan agreements, security documents, tax returns, payroll records and litigation files. Organize documents chronologically for counsel review.
- Seek immediate legal advice - consult an insolvency lawyer in Arak early to evaluate options, protect rights and avoid actions that could increase liability or worsen outcomes.
- Communicate with key stakeholders - inform major creditors, lenders and employees as advised by counsel. Transparent communication can preserve trust and enable negotiated solutions.
- Consider out-of-court solutions - evaluate whether a negotiated repayment plan, compromise or mediation makes sense before initiating court processes.
- Prepare a restructuring plan - if reorganization is feasible, prepare a realistic plan supported by cash-flow projections and cost reductions to present to creditors or the court.
- Protect assets and evidence - avoid improper transfers, preferential payments or destruction of records. Such actions can expose directors to legal claims.
- Choose the right counsel - hire a lawyer experienced in Iranian restructuring and insolvency law, familiar with Arak procedures, and able to coordinate with accountants and trustees where necessary.
- Plan for the long term - insolvency matters often involve layered issues - commercial, labor, tax and procedural - so expect a structured plan, realistic timelines and professional support through resolution.
