Bankruptcy and protective composition under the Commercial Law
If a company or a merchant stops paying debts, the path of bankruptcy and of protective composition is read from the texts that Commercial Law No. 30 of 1984 left in force, not from a popular label. The general framework for registering a company is on its page. Recovery before an Enforcement Directorate, if there is an instrument that may be enforced, is another path, on debt recovery. The Law Office of Ali Barakat follows the question from Baghdad, al-Yarmouk.
What did Commercial Law No. 30 of 1984 leave in force?
Article 331, first paragraph, repeals Commercial Law No. 149 of 1970 and its amendments, except Book Five thereof, which contains the provisions on bankruptcy and protective composition, in articles 566 to 791, until the rules of insolvency are organised by a law. The detailed rules on bankruptcy and on protective composition are not a new substitute enacted in the body of the 1984 Law. They are the provisions of Book Five of the 1970 Law, which the text expressly preserved. Until a law organises insolvency, this exception is the federal instrument named in article 331. The detailed rules are read from the preserved Book Five, in articles 566 to 791, from the text adopted in the file.
The name in the text itself is protective composition ("al-sulh al-waqi"). The effect of composition attaches to a judgment that has been issued, and that judgment is noted in the commercial register as the law provides.
Notation in the commercial register
Article 36 of the Commercial Law requires the commercial register to note, among other particulars, a judgment declaring insolvency and subjecting the merchant or the companies to winding-up, a judgment of composition and of termination of the state of insolvency, a judgment setting aside the composition, and a judgment of loss or diminution of the merchant's capacity, stating the name of the person appointed to act and the judgment restoring capacity. In those cases the court is to send a copy of the judgment, within thirty days of its becoming final, to the chamber of commerce and industry that keeps the register, for notation in the commercial register. The register is kept by the chambers of commerce and industry, under article 26. That notation publicises the particulars in the register. It does not stand in for the bankruptcy or protective-composition steps in their own book, nor for recording the company with the Registrar of Companies.
If an amendment of the registered particulars arises from a judgment or an event, an application for notation must be made within thirty days, under article 35. The detail of the register is on the commercial-register page.
Bankruptcy distinguished from winding-up and from closing a branch
The rules on bankruptcy and protective composition are not mixed with the voluntary or judicial winding-up of a company under the Companies Law; that path is on the partners-disputes and winding-up page. If the entity is a branch of a foreign company, its closing is read from the branches regulation, not from the bankruptcy book alone.
The office follows a reading from Baghdad, al-Yarmouk.
Legal basis and sources
Frequently asked questions
Were the rules on bankruptcy enacted in the body of Commercial Law No. 30 of 1984?
Not in the part of the 1970 Law that was repealed. Article 331 preserved Book Five of Commercial Law No. 149 of 1970, with the bankruptcy and protective-composition articles 566 to 791, until insolvency is organised by a law.
What is the name of the path that the text keeps, under which the merchant may continue with the agreement of the creditors?
The text names it protective composition from bankruptcy. That name is used as it appears in article 331.
Is a judgment of insolvency noted in the commercial register?
Yes. Article 36 requires a judgment declaring insolvency, a judgment of composition and of termination of insolvency, and a judgment setting aside the composition, to be noted in the commercial register at the chamber of commerce and industry.
When must a copy of the judgment be sent to the chamber for notation in the register?
Article 36 requires the court, in the cases in which that article requires notation, to send a copy of the judgment issued to the chamber of commerce and industry that keeps the register, within thirty days of the judgment becoming final, including a judgment declaring insolvency and a judgment of composition. Article 35 requires a request for notation within thirty days if the particulars of the entry change because of a judgment or an event.
Related topics and articles
- 01Recording an individual merchant in the commercial register and at the chamber of commerceAn individual merchant is recorded in the commercial register at a chamber of commerce, distinct from company registration with the Registrar.
- 02Obligations that recur after a company is recordedFinal accounts, the audit, the general-assembly meeting and copies sent to the Registrar, distinct from post-incorporation steps and from branch duties.
- 03The address of a company or branch, a lease and a title deedThe company's address in its contract, before the Registrar and in the commercial register; a lease or deed may evidence it. Not a real-estate page.
- 04Registering a company in Basra: which department is approached, and what differs from Baghdad?Registering a company when dealing in Basra under the federal Companies Law, followed from Baghdad.
- 05Company forms under the Iraqi Companies LawCompany types under Companies Law No. 21 of 1997 as amended: joint-stock, limited, partnership, simple, sole proprietorship and holding.