Often there is a situation when the debtor, despite the presence of unfulfilled obligations, begins to sell his property. In this case, there is a threat that his creditor, even having applied to the court and collected the debt from him, will not be able to execute the court decision due to the debtor's lack of property by that time, which can be levied. Is it possible to recognize transactions for the withdrawal of property by the debtor as invalid?
Formally, the law gives the creditor such an opportunity.
According to paragraph 5 of Article 350 of the Civil Code of the Republic of Kazakhstan (General Part), the creditor has the right to demand invalidation of any action of the debtor, as well as the owner of his property, if he proves that it was committed in order to evade liability for breach of obligation. In accordance with paragraph 3 of Article 158 of the Civil Code of the Republic of Kazakhstan, if one of the participants in the transaction made it with the intention of evading the fulfillment of an obligation or liability to a third party or the state, and the other participant in the transaction knew or should have known about this intention, the person concerned ( state) has the right to demand recognition of the transaction as invalid.
According to Article 65 of the Civil Procedure Code of the Republic of Kazakhstan, each party must prove the circumstances to which it refers as the basis for its claims and objections. In this regard, when filing a claim for the recognition of such transactions as invalid, it is the creditor who has to prove:
- the intention of the debtor to evade the performance of the obligation to the creditor;
- the buyers of the property are aware of the seller's intention.
It is very difficult to prove these circumstances in practice, if the parties to the transaction deny it. Therefore, before such a situation arises, creditors are strongly advised to ensure the possibility of repayment of the debt, for example, by collateral.