Register of Creditors' Claims: Why You Need to Get In on Time

The question of the register of claims usually arises after bankruptcy proceedings have already been started against the debtor, and the creditor learns about it from third parties or from a publication. A person or entrepreneur in Almaty wants to understand where and by what deadline to submit documents so that their debt does not remain outside the distribution.

In this article you will learn who gets into the register of claims and on what basis, how the deadline for filing a claim is calculated, and why it matters for the amount of the payment. Priority, the stages of reviewing a claim, objections and the typical grounds for refusing to include a claim are dealt with separately.

Register of Creditors' Claims: Where Debts Go in the Bankruptcy of a Debtor

The register of creditors' claims is a list of monetary and other property claims against a debtor declared bankrupt that were filed within the established deadline, recognised by the bankruptcy manager and satisfied out of the property mass. It records the composition of creditors, the amount of the claims and the order of satisfaction. The register is maintained by the bankruptcy manager, who is appointed by the authorised body, not by the court.

A claim is entered in the register after verification: the bankruptcy manager examines the application, the documents and any objections of the participants and either recognises the claim or refuses to recognise it, and a dispute over recognition is resolved by the court. Sending a pre-action letter or a claim does not guarantee a place in the register.

• The existence of a document confirming the basis on which the debt arose: a contract, a receipt, a court act.
• A calculation of the claim amount, separating the principal debt, the penalty and other charges.
• Information about the debtor and about the bankruptcy case within which the application is filed.
• The date of sending the application and its attachments, which allows the filing to be linked to the deadlines of the procedure.
• The absence of objections from the manager and other creditors as to the composition and amount of the claim.
• The bankruptcy manager's decision to recognise the claim or to refuse it, and, in the event of a dispute, a court act that has entered into force.

Who Can File a Claim in the Register and on What Basis

A claim in the register is filed by creditors whose rights arose before the bankruptcy case was initiated or before the publication of the debtor's declaration of bankruptcy. These are parties under civil-law contracts: supply, work and labour, loan, lease, and the provision of services. The basis is the obligation and the supporting document, not only a court act.

Employees file claims for wages, compensation for unused leave and other payments under the labour legislation of the Republic of Kazakhstan. They are accounted for separately and satisfied in the established priority. The supporting documents are the employment contract, orders, payslips and a statement of the debt.

• a contract or other document recording the debtor's obligation
• primary documents: delivery notes, acts of completed work, invoices
• a judicial act or enforcement document, if the debt has already been recovered
• employment contract, orders and a statement of salary arrears
• tax audit act, notification and calculation of assessed amounts
• documents for the register of claims confirming that the application was sent to the administrator

Deadline for filing a claim in the register of claims: why being late reduces payouts

The register of creditors' claims is formed in a bankruptcy case. A creditor who files a claim within the deadline stated in the bankruptcy administrator's announcement is included in the register and participates in the distribution of the estate on equal terms with others. If a claim is filed after that deadline, it is recognised as late and is satisfied only after settlements with creditors included within the deadline.

Missing the deadline does not remove the right to file, but it changes the order of priority. Claims filed late are paid out of the property remaining after full settlement with creditors who filed within the deadline, so the likelihood of payment is lower. In practice, such claims often remain unpaid due to insufficient estate.

• Establish the date of publication of the announcement recognising the debtor as bankrupt.
• File the claim with the bankruptcy administrator within the deadline stated in the published announcement.
• Attach documents confirming the basis and amount of the debt.
• If the deadline is missed, the claim is still filed: it will be taken into account after claims filed within the deadline.
• If recognition of the claim is refused, appeal the refusal in the court hearing the bankruptcy case.
• After inclusion in the register, monitor the bankruptcy administrator's reports on the progress of the procedure.

Register of claims and order of priority: how money is distributed among creditors

The Law of the Republic of Kazakhstan on Rehabilitation and Bankruptcy divides creditors into orders of priority, and money is distributed strictly by seniority: until the current priority is settled, the next one receives nothing. Therefore, the order of priority in the register of claims determines whether money will reach a creditor.

The order of priority is formed by the nature of the obligation, not by the date of filing: claims for compensation for harm to life and health and alimony come first, then wages and contributions, then claims secured by pledge, then taxes and other mandatory payments, and only after them settlements with other creditors. Within one order of priority, if the estate is insufficient, amounts are divided in proportion to the size of confirmed claims, and a creditor whose claim is not included in the register does not participate in the distribution.

• compensation for harm to life and health, alimony
• wages and severance pay, social contributions and mandatory pension contributions
• claims of creditors secured by a pledge over the debtor's property
• taxes and other mandatory payments to the budget
• settlements with other creditors; penalties, fines and interest are paid after the principal debt

The fifth priority covers settlements with the remaining creditors. Claims of the same priority are satisfied in proportion to their amounts.

How a claim enters the register of claims: stages of consideration

The procedure begins with a claim filed with the bankruptcy trustee within the period stated in the published announcement. The claim must meet the requirements as to form and content, and must be accompanied by documents confirming the basis and amount of the claim. Whether the claim is recognised or rejected depends on how complete the package is.

The trustee verifies whether the claim is well-founded: he examines the evidence giving rise to the obligation, checks the calculations, and takes into account objections of the debtor and other creditors. On that basis he either recognises the claim and enters it in the register or refuses to recognise it. The creditor challenges a refusal in the court hearing the bankruptcy case — the dispute is then resolved at a court hearing.

• filing a claim with the bankruptcy trustee, attaching supporting documents
• the trustee's verification of the basis and amount of the claim filed
• recognition of the claim or a reasoned refusal to recognise it
• entry of the claim in the register of claims by the bankruptcy trustee
• notification of the creditor of inclusion and further participation in the procedure

A claim filed on time and supported by documents is entered in the register of claims and taken into account in distribution; a late claim deprives the creditor of a place in the general queue.

Register of claims and objections: what to do if a creditor disagrees

Objections to the inclusion of a claim in the register may be raised by creditors included in the register, creditors whose claims are still being considered, and the debtor. Objections are filed in writing with the bankruptcy trustee before the entry is made in the register, and if the claim has already been recognised — with the court hearing the bankruptcy case; the objecting person must explain how the claim affects his rights.

A challenge of this kind involves verifying whether the debt is justified and its amount: the court examines the documents on which the claim is based and assesses them under the rules of civil procedure. The objection may concern the claim as a whole or part of it.

The dispute is heard at a court session, with the applicant, the debtor and the creditor whose claim is being challenged notified; the absence of notified persons does not prevent the court from hearing the case. The court then issues a ruling, which may be appealed.

Which claims are not included in the register: typical grounds for refusal

Inclusion in the register of creditors' claims is the way to assert your right in a bankruptcy case. A creditor outside the register does not take part in meetings and does not receive satisfaction from the estate. Refusal is most often due to the debt not being supported by documents or a breach of the filing procedure.

The administrator, and in the event of a dispute the court, checks the supporting documents: the contract, act, receipt, payment documents. They must clearly show the basis and the amount of the debt. Without primary documents, or if they do not allow the amount and period to be established, inclusion is refused. Correspondence or oral assurances are not enough.

• Absence of documents confirming the basis and amount of the debt.
• Expiry of the limitation period on the claim, if the debtor or the administrator raises it.
• The non-monetary nature of the claim — transfer of property, performance of work, provision of services.
• Obligations arising after the case was initiated and settled out of priority as administrative expenses of the procedure.
• Failure to confirm the authority of the person who signed the application.
• Errors in the calculation of the debt without documentary support.

Register of claims for an employee: how to declare salary and other payments

Employees' claims for wages and other employment-related payments are included in the register of creditors' claims in the bankruptcy case of the employer. The Law of the Republic of Kazakhstan on Rehabilitation and Bankruptcy places such amounts in the second priority, behind only first-priority claims — compensation for harm to life and health and alimony. The register is formed separately from the claims of banks and other creditors, and settlement is made after first-priority payments.

Wages are declared for the period preceding the initiation of the bankruptcy case, as well as for periods of downtime and forced absence from work, if these are supported by documents. It is not only the salary that must be declared, but also compensation for unused leave, severance pay, arrears of mandatory pension contributions and social contributions, additional payments and allowances. Employment payments are supported by the employment contract, orders, payslips and a statement of arrears.

Register of claims for an entrepreneur: contracts, supplies and loans

Where a counterparty is bankrupt, an entrepreneur needs to declare monetary claims. The basis is supply, work, service or loan contracts. Each obligation is supported by primary documents on the transfer of goods, the performance of work or the transfer of money. Without confirmation, the debt will not be included in the register.

For an LLP and an individual entrepreneur, it is important that the primary documents are drawn up in accordance with the accounting rules of the Republic of Kazakhstan and contain the mandatory details, and that the loan is supported by confirmation that the money was actually transferred. Several supplies are combined into a single claim with a list of documents and a calculation.

The claim is filed with the bankruptcy administrator within the established time limit, attaching the contract, delivery notes, acts, invoices, payment documents and the calculation. A late claim is satisfied after timely ones, so publications about the procedure should be monitored.

• a supply, work or service contract with appendices and specifications
• delivery notes, acts of completed work, invoices
• a loan agreement and documents confirming the transfer of money
• payment documents showing partial payment or its absence
• a calculation of the debt separating the principal, the penalty and interest
• evidence that a pre-action claim or demand for payment was sent to the counterparty

Register of claims: comparing the status of an included and a late creditor

The register of creditors' claims is formed by the bankruptcy manager. He recognises the filed claim as justified and enters it in the register, and if he refuses, the creditor applies to the court. A creditor who files a claim within the deadline obtains the status of a creditor in the register and the right to vote at the meeting: his vote influences the candidate for manager whom the meeting proposes to the authorised body, and decisions on property.

A creditor who files a claim after the deadline expires remains a late creditor. His claim may be recognised, but it is satisfied out of the property remaining after settlements with those in the queue. Such a creditor has no right to vote. This is a loss of influence over the procedure and a real loss of money.

An included creditor receives proportional satisfaction in his queue. A late creditor can only claim the remainder, which is often absent. The difference in status determines both the order of priority and the very possibility of obtaining satisfaction.

• Right to vote at the creditors' meeting: an included creditor has it, a late creditor does not.
• Order of satisfaction: an included creditor is in his own queue, a late creditor comes after all registered claims.
• Challenging the debtor's transactions: an included creditor may raise the matter with the manager and apply to the court, a late creditor may not.
• Distribution of the asset pool: an included creditor receives proportionally, a late creditor receives from the remainder.
• Control over the bankruptcy manager: an included creditor may appeal against his actions to the authorised body and to the court, a late creditor may not.

Status is determined by whether the claim was filed within the deadline stated in the bankruptcy manager's announcement.

Register of claims: how to check your entry and what to do if there is an error

The register of creditors' claims is maintained by the bankruptcy manager. Any creditor who has filed a claim, as well as the debtor, is entitled to review it. To do so, an application is submitted to the manager, who is obliged to provide the register at an agreed time. A refusal of access may be appealed to the authorised body and to the court hearing the bankruptcy case.

If an error is discovered — an incorrect amount, a missing entry or an inclusion of a non-existent creditor — an application to make amendments is submitted. The manager is obliged to consider it and either correct the entry or issue a reasoned refusal. A correction may also be made on the manager's own initiative.