As you know, on April 22 of this year, the Law of the Republic of Uzbekistan “On Amendments and Addenda to Certain Legislative Acts of the Republic of Uzbekistan in connection with further improvement of the system of satisfaction of creditors' claims secured by collateral” was signed.
Based on this Law, a number of amendments and addenda were introduced to ensure the priority of creditors' rights over pledged property, develop a system of extrajudicial satisfaction of creditors' claims, and simplify the processes of recovery of obligations from pledged property.
In particular, this law introduced the following amendments and additions to the Civil Code, the Laws "On Pledge", "On Mortgage" and "On the Execution of Judicial Documents and Documents of Other Bodies":
For example, although the legislation states that if the amount of the loan debt is very insignificant, the collection shall not be directed to the collateral property, but since its amount is not clearly defined, this norm has been interpreted differently in practice. Therefore, the law stipulates that if the amount of the loan debt is less than 15 percent of the collateral value and the delay in loan payment is less than 3 consecutive months, the collection shall not be directed to the collateral property.
The law provides that, in cases where there is consent of the parties, the enforcement of the mortgaged property can be carried out without the participation of the court. Before this law, the enforcement of the mortgaged property was subject to judicial resolution even if the debtor and third parties (for example, spouses) consented to the sale of the mortgaged property to cover the loan debt.
The law “On the Execution of Judicial Documents and Documents of Other Bodies” also provides that when the recovery of the loan debt is directed to the mortgaged property, the property shall be put up for auction at market value. This prevents excessive fuss by banks and debtors, unjustified extension of the recovery period, and excessive legal costs.
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