A person authorized to manage and represent a debtor community in the regime of rehabilitation

ანოტაცია

The rights and duties of the director in entrepreneurial activities are regulated by both the 1994 and 2021 editions of the Law of Georgia “On Entrepreneurs”. The powers assigned to him/her include leadership and representation of the entrepreneurial company. The legal relations of the director often goes beyond the scope of corporate law. Accordingly, the rights and duties established by other fields of law apply to him. One of them is the law of insolvency, which provides for the director’s involvement in such a regime as the rehabilitation regime. In the paper, the role of the director is considered within the framework of the regulation of the law of insolvency, the rehabilitation regime, which is regulated by the law of insolvency. In addition to reacting to the imperatively determined action, the law obliges the director to assess the evaluable and foreseeable circumstances and to take appropriate action on it. The topic is relevant and interesting, because in addition to the civil liability towards the director, criminal liability may also be considered. In order to properly discuss the topic provided by the article, the laws on Insolvency Procedings and on Rehabilitation and Collective Satisfaction of Creditors are compared with each other. Decisions/rulings of the general courts of Georgia have been used in the paper in order to clarify the position of the court regarding the issue. And, in certain cases, the legal norms of different countries and foreign language literature are cited in the article for the purpose of making a comparison.

Keywords: Insolvency; restructuring regime; manager

Introduction

In insolvency law, the rehabilitation regime is of great importance. The director appears here as one of the main actors. This article is interesting and innovative in that it discusses the legal status of the director in the insolvency field. In addition, there are no adequate and sufficient studies on the given topic. To produce a proper standard paper, various research methods, such as historical, comparative, narrative, descriptive, and other methods, are utilized.

The purpose of the research topic is to study the legal framework established for the director in the field of insolvency.

The research subject is the study of the existing and old editions of the Georgian laws on Insolvency Proceedings and the Law “On Entrepreneurs”, in which the director’s institution falls.

The research aims to study the directors’ rights and responsibilities based on the comparative analysis of Georgian and foreign countries.

The field of insolvency is becoming a popular topic day by day. The rehabilitation regime, established by law, is gaining more importance than the bankruptcy regime. In particular, the debtor’s insolvency/anticipated insolvency[1] is considered the basis for starting the rehabilitation regime. According to the law, the debtor is insolvent if they are unable to cover the due obligations.[2] As for expected insolvency, there is no directly defined definition. It does not mean a specific case of non-fulfilment of the obligation. Here, an expected fact is assumed in the future, which may or may not become reality. The forecast of insolvency does not refer to any fixed period but to the “near future”, in which time the director can foresee the future development,[3] and for the anticipation, it is necessary to make a proper, reasonable decision. In the literature, it is considered that if the community can avoid insolvency by taking appropriate measures, it is implied that it is not threatened with insolvency.[4]

“Expected insolvency, in the absence of a uniform definition, is a category to be evaluated in each specific case, and the decision of when to consider an enterprise as “expectedly insolvent” needs to be made”.[5] The impending insolvency of the enterprise must first of all be noticed by the director, who, according to the Law “On Entrepreneurs”, has an imperative obligation to declare the risk of insolvency of the entrepreneurial community.[6] In order for the director to immediately notice the expected financial problem of the enterprise, they should be guided by the principle of managerialism[7] and carry out the daily Balance-Sheet Test and Cash Flow Test of the business community and the accounting balance.[8]

Under UK law, directors are responsible for the day-to-day management of a company and are considered to have a duty to minimize losses to creditors when the company is in financial difficulty, and there is a risk of insolvency.[9] The legislation of Great Britain provides the same basis for starting the rehabilitation regime as the Law “On Insolvency Proceedings” in force in Georgia. However, it is worth noting that together with insolvency/anticipated insolvency, a compromise or a contract between the debtor and the creditor is required to eliminate, avoid, or alleviate the financial difficulty that the company has faced.[10] In fact, the latter is similar to bankruptcy settlements and parties’ contracts, which were prerequisites for the commencement of the rehabilitation regime under the Bankruptcy Proceedings Act of 1996.

Submission of application by the director

It is one thing for the director to discover the fact of insolvency, and the second is to respond appropriately to it, manifested in submitting an insolvency application to the court. The declaration of insolvency is considered a way of conducting the proceedings against the debtor through the supervision of the court and the procedures strictly prescribed by law.[11]

Accordingly, submission of the application is a necessary formal prerequisite for starting the rehabilitation regime, the mandatory requisites of which are directly determined by law. For example, the name of the court, one's status, data, arguments based on which the debtor’s insolvency or expected insolvency is established, justification - on the possibility of achieving the goal of rehabilitation, request to leave the debtor under management or to appoint a rehabilitation manager, etc.[12] Common requirements are important to give a proper look to the application because, in the field of insolvency, such a form is not used as established for filing a claim by the High Council of Justice of Georgia. Among the given general requirements, it should be noted that the arguments and justifications are mandatory. There are many positive aspects to their mandatory reference. For example, the fact that the real necessity determines the application to the court and the abuse of this right will not take place, which may result in damage to both the debtor and the creditor and the state. When it turns out that the debtor was not insolvent or expected to be insolvent in the first place, the applicant will be held liable under the law for damages and for the unfounded application.[13] It is good when the law provides for responsibility, but the evaluation criteria and standards are not defined in it. The judge determines the amount of damage based on their individual opinion.[14]

In addition to the mandatory instructions on the application, the director should consider attaching additional documents to the application if known to him. For example, this could be information about the debtor’s financial situation; information on the property of the debtor, which is encumbered by the security measure, accordingly, the identity of the secured creditor; information on the progress of other insolvency proceedings against the debtor; extract about the debtor from the Register of Entrepreneurs and Non-Entrepreneurial (Non-Commercial) Legal Entities; Also, any information that, in the applicant’s opinion, is important for the decision to open the rehabilitation regime.[15] The information is accessible to the person who manages the debtor community. Therefore, submitting additional documents to the court should not pose any problem for the director. Attaching additional documents to the application can certainly be evaluated positively. Because it will avoid misleading the court as much as possible, and there will be less risk that the director will be liable for damages.

Responsibility of the director

The Law “On Entrepreneurs” of 1994 gave a three-week period to the person authorized to manage and submit an application and provided responsibility for non-compliance.[16] The entrepreneurial law determined this obligation before the Insolvency Proceeding Law was adopted in 2007. After the Law “On Entrepreneurs” of 2021 and the current Law “On Insolvency Proceedings” were adopted, the norm regulating the issue remained the same in content, with the difference that the imperatively established norm defining the issue of responsibility was removed from the Law “On Entrepreneurs”. Meanwhile, the Law “On Rehabilitation and the Collective Satisfaction of Creditors’ Claims” indicates criminal liability for non-fulfilment of obligations.[17]

The Court of Cassation explains in one of the cases that for the purposes of corporate law, the management/representation of an enterprise is a contract reached within the framework of a bilateral contractual relationship, one party of which - the service provider - is obliged to provide the promised service, and the other party - to pay the remuneration. This type of contract is based on special trust and gives the person endowed with the right, within the framework of fiduciary obligation, full independence to carry out all the actions on behalf of and at the expense of the legal entity that will contribute to the achievement of the goal provided by the charter.[18] Within the scope of the contract between the parties, the person authorized to manage is obliged to determine the insolvency/anticipated insolvency and report it within the three-week period prescribed by law. Otherwise, as mentioned, the director will be subject to criminal liability established by law.

Article 51 of the new Law “On Entrepreneurs“ similarly regulates the issue. In particular, the supervisor must report insolvency/anticipated insolvency within the same three-week period. The Georgian legal regulation of the issue is similar to the norms stipulated by the German insolvency law. This is one of the examples of the close connection of Georgian-German law, which was clear from the day of the formation of the field of insolvency and further deepened. According to German law – “German Insolvency Regulation“, immediately after the determination of insolvency, but no later than three weeks, the person authorized to manage and represent the enterprise must apply. Failure to submit the application or late submission results in the criminal and/or financial responsibility of the person authorized for management and representation.[19]

Austrian insolvency law is very similar to German law in the legal regulation of the matter. Since the start of the COVID-19 pandemic, the director’s commitments in Austria have been treated with particular caution due to their responsibilities. During a financial crisis, managing directors’ duty of care requires them to carefully assess potential remedial issues, take appropriate restructuring measures and consider the timing of insolvency filings. Court disputes against the director on the mentioned issue increased during the pandemic. Accordingly, it will be difficult for the director to avoid responsibility if they do not fulfil their obligation and do not observe the deadline provided by the law.[20] Unlike the Georgian and German laws, Austria has a 60-day deadline for submitting an application, which has increased to 160 days during the pandemic.[21]

Exemption from liability of the director

Under the Law “On Entrepreneurs“, the duty of care imposed on the manager towards the company in order to increase profitability must be derived from the presumption of “correctness of the business decision“ (this institution has been known to us since 1829 through the Louisiana State Supreme Court.[22] It is, therefore, considered to have been developed by the courts.[23] This institution, created by the precedent law of the USA, has been incorporated in many countries of the world[24]). If the director acts in good faith with the belief that their decision was made in order to protect the best interests of community, and when making this decision, they were informed to the extent that they considered sufficient in the given circumstances, the director of the company is protected from personal liability for the consequences of this decision.[25]

Georgian legislation also provides for the release of the director from responsibility. In particular, according to the Law “On Entrepreneurs“ of 2021, the director will not compensate for the damage if they made the decision based on sufficient and reliable information, based on the interests of the entrepreneurial community, independently and without conflict of interest or influence of others.[26] The Law “On Entrepreneurs“ of 1994 established the same bases of responsibility. Accordingly, Georgian courts have a firm position on the issue. For example, courts in similar cases use the Business Judgment Rule to determine whether the directors’ duty of care has been breached. According to the Business Judgment Rule, if a director acted in good faith, as an ordinarily prudent person would do in their place, they cannot be held liable solely for the unintended consequence of the decision. In order to determine whether the director acted in accordance with the mentioned obligation, it is necessary to pass a subjective and objective test. The criterion for evaluation is the fact that their action is considered according to how an average, reasonable person in their place would have acted. A director’s liability may arise if it is found that a reckless and imprudent decision was made or if it is found that nothing was done to prevent a possible loss.[27] In order not to be held liable, any decision of the director should, first of all, be aimed at increasing the community’s property and its income.[28] The Law “On Entrepreneurs“ of 1994 and the court practice regarding the bases of director’s liability have been consolidated in the new Law “On Entrepreneurs“ and formulated in a new edition.

Director in rehabilitation regime

The Law “On Insolvency Proceedings” made minimal reservations regarding the director’s powers, while the new “Law on Rehabilitation and the Collective Satisfaction of Creditors’ Claims” provides a relatively broad framework. In particular, it defines the suspension of the director’s authority, their obligation and the amount of remuneration for the work performed. Article 72 of the law, which deals with the termination of the director’s powers, determines that after the rehabilitation manager is appointed, the director shall cease to have the powers provided by the law “On Entrepreneurs”, which implies leadership and representation. Also, if the rehabilitation manager allows the director to participate in implementing the rehabilitation process, they will be obliged to remain in the rehabilitation regime. For this, the director will receive reasonable remuneration, the amount of which is determined by the rehabilitation manager. Continuation of the director’s activity implies cooperation with the rehabilitation manager and participation in preparing and implementing the rehabilitation plan.

The law provides for a situation where the director’s authority does not end with the appointment of the rehabilitation manager, nor does it remain in the process by their decision. This exception is determined by Sections 3 and 4 of Article 99, which implies that the person authorized to lead, i.e. the director, is obliged to submit any declarations that were not previously submitted to the tax authority within 15 days after the company is declared insolvent and the court decision becomes legally binding; while in the already submitted declarations, if an error is found, it can be changed and/or added in accordance with the tax legislation. According to Section 6 of the same Article, if the director does not fulfil the mentioned obligation, the issue of their responsibility will arise, and regardless of the occurrence of such a case, they will not be released from the obligation to submit the declaration.

As noted in the Law “On Insolvency Proceedings”, the director’s powers were minimal. They only indicated that “in the process of rehabilitation, the circle of powers of the rehabilitation manager and the director of the enterprise is determined by the meeting of creditors”.[29] Therefore, it is clear that the director would participate in the rehabilitation process as much as the meeting of creditors decided and wanted their involvement.

As we can see, during the creation of the new Law, the legislators have done fruitful work on the directors’ powers and obligations. I think the changes affecting the director will positively affect the rehabilitation regime. The knowledge and experience that the director has accumulated during their management and representation will be positive for both the debtor and the implementation of the rehabilitation process. Also, it is worth noting that the Law does not define the director’s status while they remain in the rehabilitation process and continue their activities. As we can see, the director's activity is not limited to advice. Therefore, we cannot call a director consultant because they are involved in the process, from preparing the rehabilitation plan to its implementation. What will be the director’s name who will remain in the rehabilitation process? The fact that starting the rehabilitation regime and remaining in the process of the director deprives the director of the opportunity to exercise the powers that the Law “On Entrepreneurs” implies raises the question. Also, it is interesting to see what type of contract will be signed with a director during the rehabilitation process. Will it be a so-called employment contract stipulated by the Law “On Entrepreneurs” or a labor contract? If the director remains in the rehabilitation regime with the same status as the Law “On Entrepreneurs” implies, a labor law contract cannot be concluded with them because their relationship is regarded as high quality and level.[30]

Doctor of Law Roin Migriauli objected to titling the contract signed with the LLC director as a “labor contract”. He thinks the contract signed with the director should be referred to as an “employment contract”. or, by German Law, as he suggested, a “society management contract”.[31] Although this issue is no longer open in the Law “On Entrepreneurs” according to the new edition, the uncertainty of its status in the rehabilitation regime, hopefully, will not have a negative impact on the regime, and the legislative gap will be filled and/or the court will establish proper practice.

The director is a necessary body for the management of the entrepreneurial community, whose importance is crucial in properly managing the community’s activities,[32] as evidenced by the norms established by the new Law “On Entrepreneurs”. Considering the importance of the director’s institution, I think that all issues surrounding it in the insolvency field should be appropriately regulated.

Revew of the case law

After the Law “On Rehabilitation and the Collective Satisfaction of Creditors’ Claims” entered into force in 2021, many insolvency applications were filed in court, and after that, the demand for the rehabilitation regime increased twice.

In one of the cases where the rehabilitation regime was opened for the debtor, the debtor remained in the regime represented by the director - that is, the debtor is under management. There are different systems regarding insolvency law, according to which countries’ insolvency law systems are evaluated according to whether they meet international standards.[33] The 2020 law came closer to international standards when it introduced the debtor’s stay in management and activated its role with appropriate involvement in management. The European Directive also offers a similar regulation.[34] Remaining in the management of the debtor is a new institution in our legal space. A number of lectures and scientific papers were devoted to the convergence of the insolvency law field with international standards and the change of the 2007 law in order to regulate both the debtor’s bankruptcy and the rescue of their enterprises fairly, i.e., rehabilitation.[35] The activity of the mentioned debtor was the use of the autodrome and the organization of events. In this case, the debtor had a creditors’ claim in the amount of 798,000 US dollars, which was confirmed by the decision of the Supreme Court and for which appropriate measures were implemented. Enforcement measures aggravated the legal and economic situation of the debtor. Consequently, the debtor was unable to meet current tax and debt obligations. Within the scope of the seizure measure, the enterprise’s income was directed entirely to satisfy the interest of the first creditor, which led to the violation of other due and expected obligations. Since it was impossible to meet all creditor requirements with the current income of the enterprise, the debtor requested the opening of the rehabilitation regime, which the court accepted, and a decision was made to declare the application admissible and open the rehabilitation regime.[36]

During the pandemic, one of the debtors appealed to the court to open the rehabilitation regime. The main subject of debtor’s activity was the production, bottling, sale and other similar activities of wine, spirits, mash, juices, and fruit wines. In addition, the debtor carried out other activities permitted by law, such as renting out premises, etc. As it is clear from the statement, the debtor could not fulfil the due obligations, which include credit, salary, and tax obligations. The applicant points to the lack of liquidity and the start of the property sale process as the circumstances confirming the insolvency. According to the documents presented to confirm the existence of a liquidity deficit, the debtor indicates the cases of enforcement proceedings initiated by the Kakheti Enforcement Bureau due to the existing debt to the Ministry of Finance and other loan debts. As the debtor notes, their total overdue liabilities amount to 1,403,291.04 GEL, which is 51.28% of their total assets. According to the applicant, they could not cover the specified due obligations within the next 30 days. The applicant referred to secured creditors, receivables, ongoing litigation, and a reasonable likelihood of achieving rehabilitation, and in the event of opening a rehabilitation regime, leaving the director in charge. In the case under consideration, the applicant provided information and submitted relevant evidence on the debtor’s financial assets and liabilities. Regarding financial assets, according to the applicant’s explanation, he owns real estate, buildings, and various types of movable property. As for the receivables, the debtor has four debtors, the number of claims against which totals 284,285.5 GEL. As for the obligations of the financial situation, the debtor has creditors in the form of the Ministry of Finance of Georgia, the LEPL Revenue Service and other creditors, whose obligations in total amount to 1,403,291.04 GEL; Regarding the reasonable probability of achieving the goal of rehabilitation, the applicant points out that the debtor has signed a trade agreement with one of the Kazakh firms regarding the order of 3,500,000 bottles of wine worth 7,500,000 USD for the debtor; The debtor also pointed to other activities that would improve their financial situation. Also, on the 5,000-ton capacity vessel and seven grape processing lines, the warehouse space receives 3,000 GEL monthly as income based on the lease agreement. In total, the income received from the debtor’s activities may amount to 1 335 853 GEL per year, and this will allow the debtor to completely cover the existing financial obligations in about three years and, at the same time, be able to develop. Based on assessing the debtor’s assets and liabilities, the court granted the debtor’s request and opened the rehabilitation regime.[37]

The spread of the coronavirus pandemic in 2019-2020 had a significant impact on all areas of the world. Consequently, the virus left its mark on all business areas, mainly catering establishments, which resulted in insolvency. For example, one of the debtor companies, which requested the opening of insolvency proceedings under the rehabilitation regime and was active in the service sector, namely in the restaurant business, started the insolvency process due to the pandemic. Because the given company did not have liquid assets to fulfil its due obligations, it became insolvent - based on Article 7, Paragraph 1 of the Law “On Rehabilitation and the Collective Satisfaction of Creditors’ Claims”. Along with the application, the debtor submitted a project of the rehabilitation plan, which provided the solution to the debtor’s financial difficulties and effective ways of meeting the creditors’ demands. According to the plan, the company had the appropriate resources and capacity to continue its operations successfully after the end of the pandemic. The court approved the debtor’s application, on which the insolvency proceedings are being conducted under the rehabilitation regime.[38]

Conclusion

Considering everything, the following can be said as a conclusion: the person authorized to manage must establish insolvency/anticipated insolvency. Their actions must be within the scope of the law and business interests and should not be exceeded, and the imposition of responsibility for them requires an individual assessment based on the analysis of evidence, action or inaction. In addition, it cannot be assumed that the debtor’s insolvency/anticipated insolvency always results from the actions and/or inaction of the entrepreneurial entity. As the practical examples have shown, insolvency/anticipated insolvency of the debtor due to the normal activities of the enterprise, in addition to the crisis, may be caused by various factors, force majeure or circumstances such as the coronavirus pandemic that spread in 2019-2020.

As the analysis of the law has shown us, in certain cases, it is necessary to create a legal framework to dispel ambiguity regarding the issues related to the director.

Based on the research, it can be concluded that the legislator must define expected insolvency and determine from what stage it is possible to consider an enterprise as an entity in “anticipated insolvency“.

Furthermore, the law should establish the scope of responsibility for an incorrectly submitted application. Evaluation criteria and standards should be defined. According to the current law, the amount of damages is determined by the judge, depending on their opinion. I think this will always be a point of disagreement between the parties, creating additional disputes and lengthy processes.

It should be noted that the current law does not define the director’s status in the case of remaining in the rehabilitation process and continuing their activities. Therefore, it will be proper if the director’s status in the rehabilitation regime is determined and the issue will not remain unclear.

Usually, in the Georgian legislative space, the director’s rights and duties are considered within the framework of entrepreneurial law, even though, this issue is no less active in the field of insolvency, in particular, in the rehabilitation regime, which is of great importance for business entities. Considering the importance of the rehabilitation regime and the director’s institution, I believe the law should be appropriately regulated, considering the existing recommendations.

Bibliography

Used literature:

1. Bakakuri N., Gelter M., Tsertsvadze L., Jugeli G., (2019). Corporate Law - Manual for Lawyers.


2. Braun B., (2010). (Hrsg.) InsO Kommentar, 4. Aufl. § 18.


3. Brawn M., German Insolvency Law – an over­view. <http://www.mayerbrown.com/-/ media/files/perspectives-events/publications/2016/08/german-insolvency-law--an-over­view/files/get-the-full-report/fileattachment/german_insolvency_oct_14_a4.pdf>


4. Chanturia L., Ninidze, T., (2002). Commentary on the Law on Entrepreneurs, 3^rd


5. Exposure of Managing Directors of Austrian Corporate Entities in Times of COVID-19, 02.02.2022. <http://knoetzl.com/exposure-of-managing-directors-of/>


6. , (2000). The Peculiar Role of the Dela­ware Courts in the Competition for Corporate Charters, University of Cincinnati Law Review.


7. Jugeli G., (2010). Protection of Capital in a Joint Stock Company, Tbilisi.


8. Lazarishvili L., (2009). Official Contract with the Director of the Company, Theoretical and Practical Issues of Modern Corporate Law, Tbilisi, publishing house: Meridiani, Tinatin Tsereteli State and Law Institute.


9. Makharoblishvili G., (2015). General Analysis of a Corporate Governance (comparative legal research), Tbilisi, Publishing house: World of Lawyers


10. Martinez G., (2017). Re-Examining the Law and Economics of the Business Judgment Rule: Notes for its Implementation in Non-US juris­dictions, Working Paper Series.


11. Millaudon v P., (2019). 8 Mart. (n. s.) 68, 77-78 (La. Supreme Court, 1829); Criddle, Miller & Sitkoff, the Oxford handbook of fiduciary law.


12. Migriauli, R., (2021). A Brief guide to entrepre­neurial law. Tbilisi, publishing house: Sezani.


13. Migriauli R., (2016). Issues of Georgian Private Law, 2^nd completed edition, Tbilisi.


14. Migriauli R., (2003). Origin and Termination of the Legal Relationship between the Limited Liability Company and the Director, Journal: Notariat, Notarial and Private Law Review N1.


15. Meskhishvili K., Batlidze g., Amisulashvili N., Jorbenadze S., (2021). Basics of Insolvency Proceedings according to the Law of Georgia “On Rehabilitation and Collective Satisfaction of Creditors’ Claims”, publishing house: GIZ, Tbilisi. <http://lawlibrary.info/ge/books/ GIZ_Insolvency-reader_2021.pdf>


16. Schnitger H., Migriauli R., (2011). Insolvency Law., Characterization and comparison with Georgian bankruptcy law and international standards, Tbilisi, publishing house: Siesta.


17. Shalchi A., (2022). Directors’ Responsibilities during Insolvency, House of Commons Library.


18. Shalchi A., (2021). Corporate Insolvency and Governance Act 2020, House of Commons Li­brary.

Normative material:

1. Law of Georgia “On Insolvency Proceedings” <http://matsne.gov.ge/document/ view/23572?publication=31> [Last seen: 24.11.2022].


2. Explanatory Card of the Draft Law of Georgia “On Rehabilitation and the Collective Satisfaction of Creditors’ Claims” <http://info.parliament.ge/ file/1/BillReviewContent/245931> [Last seen: 24.11.2022].


3. Law of Georgia “On Entrepreneurs”.


4. Law of Georgia “On Rehabilitation and the Collective Satisfaction of Creditors’ Claims” <http://matsne.gov.ge/ document/view/4993950?publication=0> [Last seen: 24.11.2022].


5. Austrian Insolvency Code. <http://www.rautner. com/wp-content/uploads/2016/05/3645187_ Austrian_Insolvency-Code_ENG.pdf> [Last seen: 24.11.2022].


6. Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019.

Judicial practice:

1. Decision of the Supreme Court of Georgia, 06.05.2015, AS-1307-1245-2014. <http://www.supremecourt.ge/files/upload-file/pdf/+news-mnishvnelovani-ganmarte­ba78-(1).pdf> [Last seen: 23.11.2022].


2. Judgment of the Supreme Court of Georgia, 21.10.2019, No. AS-1077-2018. <http://prg.supremecourt.ge/DetailViewCivil.aspx> [Last seen: 22.11.2022].


3. Judgment of Tbilisi City Court, 17.01.2018, N2/25704-15.


4. Judgment of Tbilisi City Court, 20.12.2021, N2/32145-21. <http://matsne.gov. ge/document/view/5352736?publication=0> [Last seen: 24.11.2022].


5. Judgment of Tbilisi City Court, N2/5373-22. <http://matsne.gov.ge/document/view/5410220?publication=0> [Last seen: 24.11.2022].


6. Judgment of Tbilisi City Court, 23.04.2021, N2/8629-21. <http://matsne.gov.ge/ ka/document/download/5158898/0/ge/pdf> [Last seen: 24.11.2022].

Footnotes

[1] Law of Georgia “On Rehabilitation and the Collective Satisfaction of Creditors’ Claims”, Art. 6.1.

[2] Ibid., Art. 7.1.

[3] Braun B., (2010). (Hrsg.), InsO Kommentar, 4. Aufl. § 18, Rn. 7-8.

[4] Jugeli G., (2010). Protection of Capital in a Joint Stock Company, Tbilisi. p. 271.

[5] Meskhishvili K., Batlidze g., Amisulashvili N., Jorbenadze S., (2021). Basics of Insolvency Proceedings according to the Law of Georgia “On Rehabilitation and Collective Satisfaction of Creditors’ Claims”, publishing house: GIZ, Tbilisi. p. 29. <http://lawlibrary.info/ge/books/ GIZ_Insolvency-reader_2021.pdf>

[6] Law of Georgia “On Entrepreneurs”, Art. 51.

[7] Makharoblishvili G., (2015). General Analysis of a Corporate Governance (comparative legal research), Tbilisi, Publishing house: World of Lawyers, p. 92.

[8] Bakakuri N., Gelter M., Tsertsvadze L., Jugeli G., (2019). Corporate Law - Manual for Lawyers. p. 200.

[9] Shalchi A., (2022). Directors’ Responsibilities during Insolvency, House of Commons Library. p. 4.

[10] Shalchi A., (2021). Corporate Insolvency and Governance Act 2020, House of Commons Li­brary. p. 21.

[11] Explanatory Card of the Draft Law of Georgia “On Rehabilitation and the Collective Satisfaction of Creditors’ Claims”, p.8.

[12] Law of Georgia “On Rehabilitation and the Collective Satisfaction of Creditors’ Claims”, Art. 44.1.

[13] Ibid., Art. 18, paras. 1 and 2.

[14] Ibid., Art. 18.3.

[15] Ibid., Art. 44.2.

[16] Law of Georgia “On Entrepreneurs”, Art. 9.9. Consolidated Version – 15.07.2020.

[17] Law of Georgia “On Rehabilitation and the Collective Satisfaction of Creditors’ Claims”, Art. 16.1.

[18] Judgment of the Supreme Court of Georgia, 21.10.2019, No. AS-1077-2018. <http://prg.supremecourt.ge/DetailViewCivil.aspx> [Last seen: 22.11.2022].

[19] Brawn M., German Insolvency Law – an Overview. p. 3. <http://www.mayerbrown.com/-/ media/files/perspectives-events/publications/2016/08/german-insolvency-law--an-over­view/files/get-the-full-report/fileattachment/german_insolvency_oct_14_a4.pdf>  

[20] Exposure of Managing Directors of Austrian Corporate Entities in Times of COVID-19, 02.02.2022. <http://knoetzl.com/exposure-of-managing-directors-of/>

[21] Austrian Insolvency Code, Section 69.2. <http://www.rautner.com/wp-content/up­loads/2016/05/3645187_Austrian_Insolvency-Code_ENG.pdf>

[22] Millaudon V. P., (2019). 8 Mart. (ns) 68, 77–78 (La. Supreme Court, 1829); Criddle, Miller & Sit­koff, the Oxford Handbook of Fiduciary Law. p. 877.

[23] Fisch, (2000). The Peculiar Role of the Delaware Courts in the Competition for Corporate Charters, University of Cincinnati Law Review. p. 1063.

[24] Martinez G., (2017). Re-Examining the Law and Economics of the Business Judgment Rule: Notes for its Implementation in Non-US jurisdictions, Working Paper Series. p. 5.

[25] Decision of the Supreme Court of Georgia, 06.05.2015, AS-1307-1245-2014. <http://www.supremecourt.ge/files/upload-file/pdf/+news-mnishvnelovani-ganmarte­ba78-(1).pdf> [Last seen: 23.11.2022].

[26] Law of Georgia “On Entrepreneurs”, Art. 51.1.

[27] Judgment of Tbilisi City Court, 17.01.2018, N2/25704-15.

[28] Migriauli R., (2021). A Brief Handbook on Entrepreneurial Law, Tbilisi, publishing house: Sezani. pp. 111-113.

[29] Law of Georgia “On Insolvency Proceedings”, Art. 44.4.

[30] Chanturia L., Ninidze T., (2002). Commentary on the Law “On Entrepreneurs”, 3^rd edition. p. 303.

[31] Migriauli R., (2003). Origin and Termination of the Legal Relationship between the Limited Liability Company and the Director, Journal: Notariat, Notarial and Private Law Review N1. p. 36.

[32] Lazarishvili L., (2009). Official Contract with the Director of the Company, Theoretical and Practical Issues of Modern Corporate Law, Tbilisi, publishing house: Meridiani, Tinatin Tsereteli State and Law Institute. p. 309.

[33] Schnitger H., Migriauli R., (2011). Law “On Insolvency Proceedings”, Characterization and Comparison with Georgian Bankruptcy Law and International Standards, Tbilisi. p. 12.

[34] See Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019. Chapter 2, Art. 5.1. <http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CEL­EX%3A32019L1023&qid=1649747230750>

[35] Migriauli R., (2016). Issues of Georgian Private Law, 2^nd completed edition, Tbilisi. p. 145.

[36] Judgment of Tbilisi City Court, 20.12.2021, N2/32145-21. <http://matsne.gov. ge/document/view/5352736?publication=0> [Last seen: 24.11.2022].

[37] Judgment of Tbilisi City Court, N2/5373-22. <http://matsne.gov.ge/document/view/5410220?publication=0> [Last seen: 24.11.2022].

[38] Judgment of Tbilisi City Court, 23.04.2021, N2/8629-21. <http://matsne.gov.ge/ ka/document/download/5158898/0/ge/pdf> [Last seen: 24.11.2022].