Major Update: The Ministry of Economy of the Kyrgy,The Ministry of Economy and Commerce of the Kyrgyz Republic hereby announces the commencement of discussions on legal regulation and the collection of,Major Update: The Ministry of Economy of the Kyrgyz Republic Submits a New Draft of the Bankruptcy Law to the Parliament,

The Ministry of Economy and Commerce of the Kyrgyz Republic hereby announces the commencement of discussions on legal regulation and the collection of proposals from interested parties.

1. Description of the issues that the proposed regulation aims to address:

The current Law of the Kyrgyz Republic “On Bankruptcy (Insolvency)” (hereinafter referred to as the Law) was adopted in 1997. A number of amendments have improved the effectiveness of the law’s application; however, the underlying concept diverges from international best practices, and the following issues persist:

restructuring mechanisms and rehabilitation procedures are used less frequently than liquidation procedures;

the average duration of bankruptcy proceedings is 2.5 years, and the recovery rate for creditors is approximately 30 cents on the dollar (low);

nearly 90% of bankrupt entities have no assets, forcing the state to fund their liquidation proceedings through a special fund;

Regulation of special administrators is limited and does not contribute to the creation of a competitive market for professional administrators. Of the more than 130 registered special administrators, only 30 are actively engaged in real business operations. The creation and maintenance of a reputable profession of special administrators (insolvency specialists) is of vital importance for the effective functioning of the modern insolvency (bankruptcy) regime.2. Description of the objectives of the proposed regulation (qualitative indicators) and the approach to addressing the issues:

(1) Introduction of an effective corporate restructuring mechanism by establishing a legal framework for the rehabilitation of viable but financially insolvent enterprises, enabling them to continue their business operations without liquidation, while preserving jobs and economic potential;

(2) Increasing the predictability and transparency of procedures for creditors, ensuring fair and timely satisfaction of creditors’ claims through clear rules for asset distribution, priorities, and control mechanisms, which should contribute to increased confidence in the credit system;

(3) Establishing a simplified regime for individual entrepreneurs and peasant (farmer) households. Developing special, less costly, and expedited bankruptcy and rehabilitation procedures for individual entrepreneurs and peasant (farmer) households, taking into account their limited resources and the specific nature of their activities, including the possibility of a “fresh start” for debtors acting in good faith;

(4) Improving the liquidation process to ensure the rapid and cost-effective liquidation of unviable enterprises, including cases where there are no assets, while minimizing costs for the state and creditors;(5) Professionalization and regulation of the activities of insolvency practitioners through the establishment of a system of licensing, supervision, and self-regulation, as well as the establishment of clear ethical and professional standards to enhance the quality and independence of administrators.

3. Assessment of the expected benefits and advantages of the proposed regulation:

For the Ministry of Economy and Commerce of the Kyrgyz Republic and the Department of Bankruptcy Affairs under the Ministry of Economy and Commerce of the Kyrgyz Republic: reduced burden on the state budget for liquidation costs, growth of the tax base through the implementation of an effective corporate recovery mechanism, improvement of the Kyrgyz Republic’s position in World Bank rankings (B-READY), and promotion of economic growth overall.

For entrepreneurs: the opportunity to preserve their business and the prospect of a “fresh start” after bankruptcy.

For creditors: predictability of loan repayment and increased returns through risk minimization.

For special administrators: professionalization of the activities of special administrators.

The general public (employees): improved prospects for job retention during the rehabilitation process.

4. Assessment of potential adverse consequences:

[May 14, 2026 4:16 PM] M: No adverse consequences are anticipated following the adoption of the bill.

5. Description and assessment of the number of business entities subject to the proposed regulation:The regulation applies to all market participants registered in the Kyrgyz Republic (legal entities, individual entrepreneurs, peasant (farmer) households, financial and credit institutions, special administrators, etc.).

6. Approximate assessment of the additional costs and benefits for potential recipients of the proposed regulation associated with its implementation:

An approximate assessment of the additional costs and benefits for potential recipients of the proposed regulation associated with its implementation will be prepared during the regulatory impact analysis (RIA).

7. Approximate assessment of the costs and benefits to the national/local budget associated with the introduction of the proposed regulation:

The budget will incur moderate one-time costs to launch the reform (training judges and special administrators in new procedures, creating information resources, etc.), but will achieve stable savings in current expenditures (fees for bankruptcy proceedings).

Attached to this notice are:

(1) List of questions for participants in public consultations:

- Are the identified issues valid and in need of resolution through regulatory changes?

- Is the stated objective justified and worth pursuing?

- Is the proposed solution (regulation) the most preferable option?

- What benefits and advantages might result from adopting the proposed regulation?

- What risks and negative consequences might arise if the proposed regulation is adopted?

- Are there more effective alternative ways to address the issues?

- General opinion regarding the proposed regulation.

This list of questions may be expanded.

(2) Other information that allows for an assessment of the necessity of introducing the proposed regulation

Contact information and deadlines for discussing the notification:

Proposals may be submitted:

- by email: bakyt_b@list.ru

- by mail: 720040, Bishkek, 207 Abdumomunova St.

The deadline for submitting proposals is no later than May 22, 2026

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