Insolvency framework reforms discussed

President Shavkat Mirziyoyev was briefed on new approaches to improving the insolvency framework and the financial recovery of businesses in difficult financial situations.

The country is consistently advancing efforts to develop private business, support entrepreneurs, and create more favorable conditions for their growth. As a result of these reforms, more than 300,000 individual entrepreneurs and 5.5 million self-employed individuals are currently active, while the share of private business in the economy has increased from 45 to 58 percent over the past five years.

This year, 140 trillion soums in loans are planned to be allocated to small and medium-sized businesses, $8 billion in externally attracted resources will be directed through banks to support entrepreneurship in mahallas, and 20 trillion soums will be allocated to regions to improve production, trade, and service infrastructure.

At the same time, it was noted that many issues remain in the preservation of existing enterprises and jobs, as well as in providing early support to businesses experiencing financial difficulties.

In particular, it was noted that there is a growing trend in the number of inactive and liquidated small enterprises, indicating that the current system is focused more on formal liquidation than on the preservation and recovery of businesses.

First and foremost, insolvency procedures are not being applied effectively. Proceedings have been initiated in only 10,000 of the 93,000 businesses whose financial condition has deteriorated. Pre-trial and judicial rehabilitation mechanisms have also proven ineffective in practice—over the past five years, only 7 of the 68 enterprises that underwent rehabilitation have resumed operations.

The activities of judicial administrators were also critically reviewed. It was noted that, in a number of cases, procedural deadlines had been missed, unfounded conclusions had been issued, and mechanisms for the timely identification of fictitious bankruptcy remain insufficient. It was noted that gaps in the remuneration system for judicial administrators hinder the attraction of qualified specialists.

Furthermore, it was emphasized that the sector remains insufficiently digitized, with no online monitoring and control systems, no open register of enterprises undergoing bankruptcy or insolvency, and ineffective information exchange between government agencies.

In this regard, new institutional approaches were proposed to increase the efficiency of state administration in this area.

In particular, it was proposed to establish an Insolvency Agency under the Ministry of Justice. The agency will be responsible for implementing a unified state policy in this area, coordinating the activities of relevant state bodies, analyzing the factors of bankruptcy and taking measures to address them, as well as supporting the financial recovery of enterprises.

To enhance the effectiveness of judicial administrators, it was proposed to establish a Chamber of Judicial Administrators. The Chamber will coordinate their activities, organize the improvement of their professional training and qualifications, monitor compliance with legislation and professional ethics, and protect their rights and interests.

New financial mechanisms aimed at supporting enterprises in difficult financial situations were also presented.

Particularly, it is planned to facilitate the financial recovery of enterprises through the guarantee of the National Business Guarantee Company for small and medium-sized businesses, and the opening of low-interest credit lines in commercial banks through the Entrepreneurship Development Company.

Payments of both principal and interest on loans issued by commercial banks will be deferred until the completion of rehabilitation. The loans will then be repaid over a three-year period, providing a basis for debt restructuring.

Special attention was also paid to simplifying the procedures for deferring and restructuring tax and credit debt.

In particular, a procedure is being introduced under which district and city councils of people’s deputies will be authorized to grant deferrals on certain taxes or allow repayment in installments. Similar mechanisms may also be applied by tax authorities based on collateral, bank guarantees, or insurance policies.

State support for pre-trial rehabilitation will also be expanded. It will become possible to use such tools as creditor agreements, the attraction of financial assistance, deferral of tax and loan payments, debt buyouts, production re-profiling, enterprise restructuring, the engagement of qualified specialists, and workforce retraining.

The presentation also emphasized the importance of digitizing insolvency procedures.

It was proposed to introduce a unified electronic platform for managing insolvency cases. The platform will maintain registers of individuals subject to insolvency proceedings, enterprises undergoing rehabilitation, and judicial administrators. All processes, from application submission to enterprise liquidation, will be conducted electronically. In addition, access to the platform’s data will be open to the public and the media.

This will ensure transparency in the industry, speed up information exchange, strengthen control and monitoring, and also reduce the time for considering applications.

The President stressed that support for entrepreneurship should not be limited to the creation of new enterprises, it is equally important to preserve existing businesses, provide timely assistance to enterprises facing temporary difficulties, and return them to economic activity.

Responsible officials were given clear instructions to fundamentally improve the insolvency framework based on international best practices, introduce modern management approaches, implement effective rehabilitation mechanisms, and adopt digital solutions in the sector.