Collecting receivables from a counterparty company: what to do under Georgian law

What to do

1. Limitation: the limitation period for contractual claims is three years (Civil Code of Georgia, Art. 129). Acknowledgement of the debt, such as a reconciliation statement or partial payment, interrupts limitation (Art. 137). After an interruption the period starts anew (Art. 141), so obtain a signed reconciliation statement immediately.
2. First assess the debtor’s solvency. If there are signs of insolvency, payments received are challengeable if made within 1 year before the start of proceedings; for related persons, the period is 2 years (Law on Rehabilitation and Collective Satisfaction of Creditors’ Claims, Art. 66). Once the court accepts an insolvency application, enforcement against the debtor is stayed (moratorium) (Art. 55). Therefore act urgently, using the security measures described below. A creditor may also file an insolvency application against the debtor itself (Art. 43), which can serve as leverage.
3. Amount: the debt plus contractual interest and penalties. Compound interest applies only if the contract expressly provides for it (Civil Code of Georgia, Art. 403). Send a claim stating the calculation and a deadline.
4. Undisputed debt: first try the NBE. The NBE’s simplified procedure is available for a documented monetary claim whose due date has passed (Law on Enforcement Proceedings, Art. 91³). It is not available where a counter-obligation is unperformed, or where there is an arbitration clause (Art. 91²). The debtor has 10 calendar days from notice to pay, acknowledge the debt, or file an objection (Art. 91⁷). If the debtor is silent or acknowledges the debt, an enforcement order for the full amount is issued (Art. 91⁷). If the debtor objects, the order is refused (Art. 91⁷). After an objection, the NBE’s freeze is lifted after 1 month if court proceedings on the claim have not begun (Art. 91¹⁰).
5. Disputed debt or asset stripping: go to court. Security for the claim means freezing accounts or property (Civil Procedure Code of Georgia, Art. 191). Security may be requested before the claim is filed, but the claim itself must then be filed within 10 days (Art. 192).
6. Where to apply: the National Bureau of Enforcement (აღსრულების ეროვნული ბიურო); the court.
7. Evidence: contract; waybills and acts; tax invoices; reconciliation statement; claim letter; payment statements.
8. Traps: a reconciliation statement without the signature of an authorised person; failing to file the claim in time after an objection; delaying until the debtor becomes insolvent.

Be sure to check

• a reconciliation statement or acknowledgement of the debt interrupts the three-year limitation period and starts it anew
• NBE simplified procedure: conditions, the debtor’s response period, objection and its consequences
• security (freezing) in court and the deadline for filing the claim
• insolvency risk: moratorium, creditors’ register, challenge of payments received