The Effect of Civil Debts (Non Commercial) on the Realization of Bankruptcy

Whether the nature of a debt affects the realization of bankruptcy is among ambiguities having been left unaddressed in Article 412 of Iran Commercial Law due to the lack of new legislation in this respect. Given that commercial debts may realize conditions for an order of bankruptcy to be issued; this study was intended to explore the effect of non-commercial debts in this regard.
The issue in question has been raised due to Iran Commercial Law’s absolute (unconditional) use of the term ‘debts’. Some believe that debts, regardless of their nature, may serve a cause for bankruptcy, while others grant such an effect only to commercial debts. This disagreement in jurists’ orientations has led to the lack of concurrence among court decisions: courts advocating either of these notions operate diversely in their decisions.
The scrutiny and analysis of these notions led us to the conclusion of non-commercial debts exerting no effect on bankruptcy realization. Performing a critical analysis of the scientific literature in favor of civil debts’ effect, this study also provides other relevant arguments to reinforce its position.