Best Restructuring & Insolvency Lawyers in Georgia

About Restructuring & Insolvency Law in Georgia

Restructuring and insolvency law in Georgia governs the legal processes businesses and individuals must follow when facing financial distress, inability to pay debts, or seeking to reorganize their financial affairs. The primary goal of these laws is to provide fair procedures for resolving debts and obligations, assisting creditors in recovering funds, and enabling debtors to address insolvency in an orderly manner. The Georgian Law of Insolvency and related legislation provide a structured framework for both liquidation and rehabilitation (restructuring) of financially troubled entities or individuals. This process aims to balance the interests of creditors and debtors while preserving as much value as possible within the local legal and economic context.

Why You May Need a Lawyer

There are several situations where legal guidance is essential in restructuring and insolvency matters in Georgia. You may require a lawyer if you or your business is struggling to pay debts, facing creditor actions, or being threatened with bankruptcy proceedings. Legal assistance is also crucial for creditors seeking to recover what they are owed or protect their interests in insolvency proceedings. In addition, navigating the complex forms, procedures, and requirements of Georgian insolvency law can be challenging without professional advice. A lawyer can assist with filings, negotiations with creditors, debt restructuring plans, court representation, and ensuring compliance with all statutory obligations.

Local Laws Overview

Restructuring and insolvency in Georgia are primarily governed by the Law of Insolvency Proceedings. This law distinguishes between two main procedures: rehabilitation (reorganization or restructuring) and liquidation (bankruptcy). Rehabilitation is focused on restoring the solvency of the debtor through restructuring debts, operations, or assets, often under court supervision. Liquidation involves the orderly winding up of the debtor's affairs and distribution of assets to creditors.

Key aspects of local law include:

• The initiation of insolvency proceedings can be requested by either the debtor or creditors.
• Court approval is required for both rehabilitation and liquidation procedures.
• The appointment of an insolvency manager or administrator is standard to oversee the process.
• There are specific timelines for filing claims, submitting debt restructuring proposals, and completing proceedings.
• The rights and priorities of secured and unsecured creditors are defined by law.
• Legal frameworks exist to detect and reverse fraudulent transfers or transactions made to avoid creditor recovery.

The Georgian legal framework is intended to align with international standards, providing rules for cross-border insolvency and provisions that encourage business rescue and fair creditor treatment.

Frequently Asked Questions

What is the difference between restructuring and insolvency in Georgia?

Restructuring (rehabilitation) is a legal process aimed at helping a financially distressed business or individual reorganize debts and continue operations. Insolvency (often resulting in liquidation) usually means that assets are insufficient to cover debts, leading to the orderly sale of assets to pay creditors.

Who can initiate insolvency proceedings in Georgia?

Insolvency proceedings can be initiated by the debtor or by creditors who have not received payment for their claims. The process begins with an application to the Georgian courts.

How long do insolvency proceedings usually take?

The duration varies depending on the complexity of the case, the number of creditors involved, and whether the process is rehabilitation or liquidation. Proceedings can take several months to a few years.

What happens to a company’s assets during insolvency?

During insolvency, the company’s assets are managed by an appointed insolvency manager or administrator. These assets may be sold off to repay creditors if liquidation is initiated, or reorganized in case of rehabilitation.

Are directors or owners personally liable for company debts?

Generally, directors and owners of limited liability companies are not personally liable for company debts. However, liability may arise in cases involving fraud or illegal actions proven to have harmed creditors.

Can a company continue to operate during insolvency proceedings?

If the court approves a rehabilitation (restructuring) plan, the company may continue its operations under supervision while implementing the agreed changes. In liquidation cases, business activity is usually terminated.

What protections are available for creditors in insolvency?

Creditors have the right to submit their claims, participate in creditors’ meetings, and have their interests represented in court. The law establishes priorities for how available assets are distributed among creditors.

Is cross-border insolvency recognized in Georgia?

Yes, Georgian law provides for recognition of certain cross-border insolvency procedures and coordination with foreign courts, subject to local legal requirements and court approval.

What are the typical costs associated with insolvency filings?

Costs include court fees, administrator or insolvency manager fees, and professional expenses such as legal or accounting services. The amount depends on the size and complexity of the case.

How can I challenge an insolvency decision in Georgia?

Parties to insolvency proceedings have the right to appeal certain decisions made by the court or the insolvency manager. Appeals must be filed within specified timeframes and according to the procedures set out in Georgian law.

Additional Resources

For those seeking information or support regarding restructuring and insolvency in Georgia, the following resources can be helpful:

• Ministry of Justice of Georgia - Provides information on legislation and court processes.
• The National Agency of Public Registry - Handles company and property registrations involved in insolvency cases.
• Georgian Bar Association - Can assist in finding qualified insolvency and restructuring lawyers.
• Georgian courts - Official court websites might offer procedural guides and access to relevant forms.
• Business support organizations and trade associations - May offer advisory services for distressed companies.

Next Steps

If you are facing actual or potential insolvency, or if you are a creditor dealing with a debtor who is unable to pay, you should consider the following steps:

• Consult with a qualified restructuring and insolvency lawyer in Georgia to assess your situation and rights.
• Review financial records, contracts, and correspondence related to debts or claims.
• Consider options such as out-of-court restructuring, negotiation with creditors, or formal insolvency proceedings.
• Prepare all necessary documentation for court filings, including lists of assets, debts, and creditor information.
• Stay informed regarding your rights, obligations, and deadlines during the legal process.

A legal professional can guide you through each stage, help protect your interests, and improve the likelihood of a successful outcome. Early engagement with an expert often leads to more favorable solutions, whether through restructuring, settlement, or formal insolvency proceedings.