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Creditor Rights in Bankruptcy

Will I lose money if the company goes bankrupt?

Not necessarily. Active participation increases your chance of recovering part or all of the debt, especially if you are a secured creditor.

Difference between rehabilitation and bankruptcy?

Bankruptcy means selling assets and dissolving the company. Rehabilitation means saving the company and repaying debts over time while continuing business.

What is the deadline to file a claim?

20 days from the publication of the insolvency notice. Missing this deadline is risky.

Does the bank have priority?

Banks are usually "secured creditors" (via mortgage) and have priority. However, unsecured creditors also have voting rights and can influence the process.

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3 min

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Creditor Rights in Bankruptcy is a crucial legal area protecting individuals and entities when their debtor declares insolvency (bankruptcy). The "Law of Georgia on Rehabilitation and the Collective Satisfaction of Creditors" prioritizes company survival (rehabilitation) over liquidation. However, creditors are often at risk in this process: they may lose money or wait years for insignificant repayments. Protecting creditor rights requires active involvement: attending creditors' meetings, evaluating rehabilitation plans, and preventing debtor attempts to hide assets. Legal.ge offers experienced lawyers who ensure maximum protection of your interests in complex and lengthy bankruptcy proceedings.

What Does Creditor Rights Service Cover?

This service ensures the creditor's active participation in the process. It includes:

  • Claim Recognition: Registering the creditor's claim in court and verifying its amount to be included in the registry of creditors.
  • Representation at Meetings: Voting on behalf of the client, appointing a rehabilitation manager, and approving/rejecting plans.
  • Rehabilitation Plan Analysis: Assessing whether the debtor's proposal is realistic and beneficial for you.
  • Clawback Actions: Challenging contracts made before bankruptcy through which the debtor hid assets (avoidance actions).
  • Secured Creditor Rights: Protecting the privileged status of creditors secured by mortgage or pledge.

Real-World Scenarios Where You Need a Lawyer

For example, a company owing you money starts rehabilitation and offers to pay over 10 years. This is unacceptable to you. A lawyer will help you form a creditor bloc, reject this plan, and demand faster payment or asset liquidation. Another example: you learn that 2 months before bankruptcy, the debtor "gifted" expensive property to a partner. A lawyer will file a lawsuit to void this transaction (Paulian action) and return the property to the estate to cover your debt.

Georgian Legal Framework

Since 2020, the new "Law on Rehabilitation and the Collective Satisfaction of Creditors" has been in force. The law divides creditors into classes (secured, unsecured, privileged). Decisions are made at creditors' meetings by a majority vote. Deadlines are critical: claims must be submitted within a specific period (usually 20 days) from notification or publication; otherwise, the claim may be disregarded.

The Process Step-by-Step

1. Monitoring: Receiving information about the debtor's bankruptcy. 2. Application: Submitting the claim to the court. 3. Meeting: Attending the first meeting and electing a manager. 4. Plan Review: Studying and voting on the rehabilitation or bankruptcy plan. 5. Execution: Receiving funds according to the plan.

Why Choose a Specialist on Legal.ge?

Bankruptcy proceedings are complex and specific. A passive creditor often loses everything. On Legal.ge, you will find lawyers who know how to use collective power and the law to save your money.

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