Insolvency Law at Iran
Iran's insolvency and liquidation framework is primarily governed by the Commercial Code of 1932, supplemented by the Civil Code and the Islamic Penal Code. The system distinguishes between voluntary and compulsory liquidation, with specific procedures and priorities for creditor claims. (Understanding Liquidation and Insolvency Procedures in Iran)
⚖️ Legal Grounds for Liquidation
In Iran, companies may undergo liquidation under various circumstances: (Understanding Company Liquidation in Iran - Sayari Learn)
Voluntary Liquidation: Initiated by the company's shareholders or partners, often through a majority vote. This process involves appointing a liquidator to settle debts and distribute remaining assets. (Understanding Liquidation and Insolvency Procedures in Iran)
Compulsory Liquidation: Can be imposed by the court, typically when a company is insolvent or unable to continue operations. Creditors can petition the court to declare a company bankrupt, leading to the appointment of a liquidator. (Understanding Liquidation and Insolvency Procedures in Iran)
🧑⚖️ Liquidation Process
The liquidation process in Iran involves several key steps:
Dissolution: The company ceases its operations, and this status is announced in the Official Gazette (Rooznameh). (Understanding Company Liquidation in Iran - Sayari Learn)
Appointment of Liquidator: A liquidator is appointed to manage the winding-up process, which may be a shareholder, partner, or an external party. (Understanding Liquidation and Insolvency Procedures in Iran)
Asset Management: The liquidator collects debts, settles liabilities, and may undertake necessary transactions to fulfill obligations. (Company Liquidation in Iran - Law Firm in Iran)
Distribution of Assets: After settling debts, remaining assets are distributed among shareholders or partners. (Understanding Liquidation and Insolvency Procedures in Iran)
Finalization: Upon completion, the company is formally dissolved, and its legal entity ceases to exist. (Company Liquidation in Iran - Law Firm in Iran)
📋 Priority of Claims in Insolvency
Iran's insolvency laws establish a hierarchy for creditor claims during liquidation:
Employee Claims: Wages, severance, and other employment-related entitlements. (Understanding Liquidation and Insolvency Procedures in Iran)
Tax Liabilities: Outstanding taxes owed to the government. (Understanding Liquidation and Insolvency Procedures in Iran)
Secured Creditors: Creditors holding collateral against debts.
Unsecured Creditors: General creditors without collateral. (Understanding Liquidation and Insolvency Procedures in Iran)
This prioritization ensures that essential obligations, such as employee compensation and tax duties, are addressed before other debts. (Understanding Liquidation and Insolvency Procedures in Iran)
⚠️ Criminal Offenses Related to Bankruptcy
Iranian law distinguishes between bankruptcy resulting from fault and fraud: (Bankruptcy Rules and Regulations in Iran - Iran Best Lawyer)
Fault: Involves negligence or failure to adhere to legal obligations, such as not declaring insolvency in a timely manner. Penalties can include imprisonment for six months to two years.
Fraud: Involves deliberate actions to deceive creditors, such as concealing assets or falsifying records. Penalties can include imprisonment for one to five years. (Bankruptcy Rules and Regulations in Iran - Iran Best Lawyer)
🏛️ Regulatory Authorities
Key institutions overseeing insolvency and liquidation processes in Iran include:
Commercial Court: Handles bankruptcy petitions and supervises liquidation proceedings.
Corporate and Non-Commercial Institution Registration Bureau (CNCIRB): Registers companies and oversees the dissolution process.
Ministry of Economic Affairs and Finance: Regulates financial matters, including tax obligations during liquidation. (Understanding Company Liquidation in Iran - Sayari Learn)
RELATED Blog
0 comments