Debt recovery from LLPs and sole traders in Almaty — we take it all the way to money in the account, not just a decision in a folder

Useful information

Debt recovery from LLPs and individual entrepreneurs: from checking the debtor to money in the account

The situation is usually the same: the contract has been performed, the act has been signed, but payment has not arrived. The director of the LLP stops answering calls, the individual entrepreneur cites difficulties, the supplier is already waiting for money for the goods. At that moment it is easy to do two mutually exclusive things: either wait for months for "they'll pay any day now", losing time and missing deadlines, or file a claim straight away and find out that the debtor has had nothing for a long time.

The mistake is also costly because an LLP and an individual entrepreneur are different debtors with different liability, different property and different ways of getting to the money. What follows is a practical sequence: where to start in a specific situation, what a pre-action claim achieves, how to check the debtor, when to bring in interim measures and what to do if the debtor has nothing or has started talking about bankruptcy.

Debt recovery from LLPs and individual entrepreneurs: where to start in a specific situation

When it comes to debt recovery from LLPs and individual entrepreneurs, the first thing to do is to understand who exactly owes and what they are liable with under the obligation. These are two different legal constructs: an LLP is a legal entity that is liable with its property on the balance sheet, while an individual entrepreneur does not separate business debts from personal assets. Both the set of documents and the strategy depend on this fork — debt recovery from legal entities and debt recovery from individual entrepreneurs follow different scenarios, especially when the question of personal liability of the director or the entrepreneur himself arises.

While the debtor is operating and has assets, we work through a pre-action claim, court and enforcement proceedings. If the LLP has an empty balance sheet or liquidation has begun, we check whether the director and participants can be held personally liable. If the debtor is an individual entrepreneur, we look at whether he has personal property that can be levied against. In each of these situations, the first step is not a claim but a sober assessment of what money can realistically be recovered from.

Start with a check: obtain a certificate of registration of the legal entity from the National Register of Business Identification Numbers on egov.kz, check whether the debtor is active, whether there is a record of bankruptcy or liquidation, and whether it has property and accounts. In parallel, gather confirmation of the debt: the contract, delivery notes, acts, correspondence, payment documents. Then the fork is as follows:

• Who the debtor is: an LLP, an individual entrepreneur, or both
• What they are liable with: the company's balance sheet or personal assets
• Is the debtor still operating and is there any bankruptcy in progress
• Which documents confirm the debt
• Is there property and are there accounts available for enforcement

Debt recovery from legal entities and individual entrepreneurs: how these debtors differ

A partnership and an individual entrepreneur are liable to a creditor differently, and the entire strategy for debt recovery from legal entities depends on this. An LLP is liable only with its own property: the participants risk the contributions they have made, but not their personal flats and cars. That is why recovery from legal entities comes down to the question of what the company has on its balance sheet and whether enforcement can be directed at it.

With an individual entrepreneur it is different. Even if the entrepreneur has deregistered, the obligations do not disappear: the status ends, but the debt remains with the individual, who is liable for it with all of their property. Hence the different approaches: in the first case, assets on the balance sheet are sought; in the second, the property of a specific person, and this changes both the list of documents and the tactics.

• LLP — the risk is limited to the partnership's property; the personal property of the participants is affected only through subsidiary liability in bankruptcy
• Individual entrepreneur — after closure the debt does not go anywhere and stays with the person
• For an LLP it is important to understand what the company actually owns at the time of the dispute
• For an individual entrepreneur it makes sense to look at the entrepreneur's own property and income

Recovering a debt from a legal entity without court: the claim letter and the calculation

A claim letter with a calculation and a prepared position closes most cases without court — in practice this accounts for 71% of debts. Debt recovery from a legal entity through a claim letter works because the debtor sees that the creditor has already gathered the documents, calculated the penalty and is ready to go to court. Many LLPs and individual entrepreneurs at this stage prefer to settle so as not to pay extra for court costs, the state duty and the fees of the court enforcement officer.

This is how the claim letter becomes a document that leaves the debtor no room for excuses: it already sets out the principal debt, the contractual penalty and interest, with acts, delivery notes, invoices and correspondence attached, and the demand rests on specific terms of the contract and the provisions of the Civil Code on non-performance of obligations. If a pre-trial procedure is set out in the contract, the claim will be returned without a claim letter — this is a direct ground under the Civil Procedure Code. If a pre-trial procedure is set out in the contract, the claim will be returned without a claim letter — this is a direct ground under the Civil Procedure Code. If a pre-trial procedure is set out in the contract, the claim will be returned without a claim letter — this is a direct ground under the Civil Procedure Code. If a pre-trial procedure is set out in the contract, the claim will be returned without a claim letter — this is a direct ground under the Civil Procedure Code. If there is no response or the debtor replies with general phrases, the claim letter with the calculation becomes a ready framework for the statement of claim: all that is left is to add the procedural documents and file with the court, without gathering the evidence again.

The claim letter includes more than just a demand to repay the debt. It also includes:

• The calculation of the principal debt based on the reconciliation statement, invoices and delivery notes.
• The contractual penalty or interest — with the start and end dates of the delay.
• References to correspondence in which the debtor acknowledged the debt or asked for a deferral.
• A warning about going to court and the subsequent recovery of court costs.

Checking the debtor before recovering debts from legal entities

Before filing a claim for recovery of debt from legal entities, it is worth spending time checking the debtor. This takes about 3 days: we look at what assets are registered to the company — real estate, vehicles, equipment, shares in other organisations, whether there is money in bank accounts and how actively it is used. If the property has already been re-registered to other persons or the accounts are empty, the court and the subsequent enforcement proceedings will produce no result, and you will lose time and money on the state duty.

At the same time we check other claims against the debtor and signs of impending bankruptcy. When a company is already losing several cases to creditors, while itself filing for bankruptcy or receiving such applications, the chances of getting the money drop sharply — in bankruptcy proceedings claims are satisfied in a certain order of priority. The check will show where the debtor is heading and help decide whether it is worth starting the process at all. Here is what is important to establish before filing:

• Whether the debtor has liquid property and where it is located.
• Account activity: whether money is coming in and where it is going.
• Court cases: how many creditors are already recovering debts.
• Signs of bankruptcy: filings, publications, liquidation.

Is there any point in recovering a debt if the debtor has nothing

The honest answer is this: going to court is not always worthwhile. We check the debtor before filing a claim and tell you straight what is realistically achievable — if the LLP or sole trader has no assets and there are no prospects of recovery either, we will say so immediately and suggest monitoring the debtor first rather than starting proceedings just to get a decision for the file. You will receive an enforcement order, but it will remain a piece of paper: recovering a debt from an LLP or sole trader that has neither property nor turnover on its accounts is impossible, whether through the court or through a private or state court enforcement officer.

Before deciding whether to go to court, it is important to understand what exactly you will get. Whether the debtor has an operating business, movable or immovable property, receivables or other sources of money — this is what determines whether the time and effort will pay off. If none of this exists, it is more honest to tell you so straight away rather than drag the matter out. But the situation can change: assets appear later, so the decision is not forever — monitoring the debtor in such cases can also be reasonable.

• The LLP or sole trader is not actually carrying on business and is not filing reports;
• there is no movement on the accounts and no property on the balance sheet;
• the director and participants are linked to other 'empty' companies;
• the debtor is already preparing for bankruptcy or liquidation;
• there are no other sources of recovery besides the debtor itself.

Interim measures in debt recovery from legal entities

The seizure of the debtor's accounts and property is applied for at the same time as the claim — in the same application, not once the case has already been won. This is the key point for recovering debts from legal entities: while the court hears the dispute, the debtor quietly re-registers equipment, withdraws balances from accounts and sells off inventory. As a result, the judgment remains on paper, and the enforcement officer arrives to an empty current account and a closed office.

The most expensive mistake is to file a claim and delay interim measures until the first hearing. During that period the debtor manages to move assets out, and recovering them afterwards becomes almost impossible. That is why the application for seizure is prepared together with the claim, and if the debtor has already started selling off property, it is filed during the proceedings too, without waiting for the outcome.

• Seizure of current accounts and the money in them
• Seizure of immovable property, vehicles, equipment
• Prohibition on disposing of shares in other companies
• Prohibition on registering transactions with the debtor's property
• Suspension of asset withdrawals through affiliated persons

How long does debt recovery from a legal entity take

The timeframe for recovery depends primarily on what the debtor itself has, not on the amount of the debt. For an operating LLP or sole trader with assets in its accounts, equipment and immovable property, recovery of debts from legal entities rarely takes less than several months: the court hearing, the judgment entering into force after the appeal period, enforcement proceedings and the money arriving in the account. If the debtor has been moving property out or has already filed for bankruptcy, the horizon stretches — a year or more, because transactions will have to be challenged, assets traced and a claim entered in the register of creditors.

We only give a specific timeframe after checking the debtor: statements, registers and open data show whether there is anything to recover and how quickly. Before that check, any figure is guesswork, and it is more honest to say so straight away. After that, how events unfold depends on how the debtor behaves:

• the property is in place and the accounts are active — the enforcement officer debits the money;
• the assets have been re-registered to affiliated companies — challenging the transactions;
• the debtor is in bankruptcy — entering the claim in the register of creditors.

The debtor cites poor-quality work in debt recovery

An objection about quality is a common way of avoiding a debt. The customer says the work was not done properly, the service was performed poorly, the goods do not meet the terms, and on that basis refuses to pay. In debt recovery from a legal entity this objection comes up constantly: it turns a simple dispute about money into a dispute about the fact and quality of performance.

To counter such a position, the performance documentation, all correspondence between the parties and photographic evidence of the result are gathered. If the dispute turns on technical or specialist issues, an expert examination is ordered, and here the wording of the questions put to the expert is decisive: it determines what exactly goes into the report and how the court will assess the quality of the debtor's work.

• Acts of completed work, delivery notes, ledgers, correspondence on volumes and deadlines
• Photo and video recording of the site, goods, or result of work
• Claims and the debtor's replies where it first raised the defects
• A specialist's or expert's report on disputed quality issues

Debt recovery from sole traders and from the director of an LLP: personal and subsidiary liability

Debt recovery from a sole trader usually comes up against the fact that the sole trader himself owns no property: everything is registered to a spouse, relatives or another LLP. But a sole trader's debt is a citizen's debt, so he is liable with all his property, not only what is stated in his registration. If the entrepreneur transferred the business to a new entity and left the old one empty, that is already grounds to challenge transactions that moved assets out and to enforce against his personal assets: subsidiary liability does not apply to a sole trader — he is liable for his debts himself anyway.

A company's debt can be recovered personally from a director or participant of an LLP only through subsidiary liability: under Article 44 of the Civil Code and the Law "On Rehabilitation and Bankruptcy" it is claimed in the bankruptcy case, when the company's property is insufficient and the insolvency was caused by the actions of those persons. The grounds that courts accept most often:

Assets were moved to controlled companies or relatives before the claim or immediately after it. Transactions were concluded on knowingly unfavourable terms — sale of property below market price, loans to "their own". No bankruptcy petition was filed, although signs of insolvency were obvious. Money or goods were taken out of circulation through front men.

The debtor has filed for bankruptcy: what to do in debt recovery

If the debtor has filed a bankruptcy petition, time is counted in days. The creditor must urgently file its claim in the register of creditors: the deadline is limited, and claims filed late are satisfied last — out of the property remaining after settlements with creditors who filed on time. This is the key difference between bankruptcy and ordinary debt recovery from a legal entity, where you can spend years looking for assets and filing claims. Here everything depends on timeliness.

What needs to be done for the claim to be accepted and taken into account:

• Confirm the debt with documents: contract, delivery notes, acts, receipts, correspondence.
• State the exact amount of the principal debt, penalty and interest.
• Send the claim in the prescribed manner to the temporary or bankruptcy manager and to the court hearing the bankruptcy case.
• Attach evidence that the claim was sent to the debtor.
• Inform the manager of your bank details for inclusion in the register and subsequent payments.

Debt recovery from LLPs and sole traders: comparing prospects by type of debtor

To understand the prospects in your case, it is useful to compare debtors on three parameters: whether they have real assets, how solvent they are, and how long the path to the money will take. Debt recovery from legal entities and sole traders almost always comes down to what the debtor is liable with: an LLP with turnover and property has a higher chance of repaying the debt, while a sole trader with no assets and closed accounts has a noticeably lower one.

The simple logic: the more publicly available information there is about the debtor's property, the faster and more likely enforcement is. If bankruptcy proceedings are already under way against the company or its operations have effectively stopped, the timelines stretch out and the result depends on the asset pool. Practice in recovery is built around which type of debtor you are facing: the approach will differ for supply, construction, services, lease or loan contracts.

• An LLP with property and turnover — assets exist, the chance of getting the money is higher
• An LLP with no property but an operating business — recovery is possible through accounts and receivables
• A sole trader with income and accounts — enforcement is more realistic than against a sole trader with no activity
• A debtor in bankruptcy or with zero accounts — the result depends on the asset pool

The assessment is indicative: the outcome depends on the specific assets, accounts and the stage of the bankruptcy procedure.

Debt recovery and enforcement of a judgment: from claim to money in the account

Once the court judgment enters into force, enforcement begins. Debt recovery from legal entities depends on the court enforcement officer — private or state. The faster accounts and property are seized, the higher the chance that the money reaches the creditor.

Sometimes the debtor is not simply an LLP with an empty account, but a structure with tax or corporate peculiarities. In that case, debt recovery from legal entities requires a tax or corporate specialist: challenging transactions, asset stripping, liability of controlling persons. That expertise is available within the same practice.

It is useful to keep the following set of documents to hand:

• Order on initiating enforcement proceedings
• Writ of execution and payment details
• Information on known accounts and property of the debtor
• Correspondence with the court enforcement officer: requests and replies

If at any stage it becomes clear that a tax or corporate perspective is needed, the relevant specialist from the same practice handles the matter.

First a check — then a claim. If the debtor has no assets and no prospects, it is more honest to say so straight away than to run a case for the sake of running a case.