The Role of Creditors in the Restructuring of Insolvent Business Enterprises
Subject Areas : EconomicParasto yusefi 1 , Mohsen Emami Gheshlagh 2 * , asghar arabian 3
1 - Doctoral student of Private Law, Department of Private Law, School of Law, Theology and Political Science, Science and Research Unit, Islamic Azad University, Tehran, Iran
2 - Assistant Professor and Faculty Member, Law Department, Urmia Branch, Islamic Azad University, Urmia, Iran.
3 - Associate Professor, Faculty Member, Department of Private Law, Faculty of Law, Theology and Political Science, Science and Research Branch, Islamic Azad University, Tehran, Iran
Keywords: Creditors, economic enterprises, bankrupt.,
Abstract :
The current Iranian Commercial Code is primarily derived from the French Commercial Code of 1807. Despite its abrogation in France and subsequent reforms in comparative jurisdictions, Iran has not enacted substantive legislative reforms in bankruptcy law since the promulgation of the 1932 Code. Meanwhile, the rapid expansion and complexity of commercial activities have necessitated the adoption of modern insolvency frameworks in other jurisdictions, most notably corporate restructuring regimes. Restructuring—implemented through a legally binding restructuring plan—applies to both commercial and non-commercial debtors. Its initiation requires approval by a qualified majority of creditors and subsequent confirmation by the court. Upon judicial confirmation, the debtor assumes the status of debtor-in-possession, retaining managerial control over assets and operations while negotiating repayment schedules with creditors within court-sanctioned deadlines. This plan generates binding obligations for both debtors and creditors, serving as a mechanism to preserve enterprise value while ensuring creditor satisfaction. In Iranian law, restructuring in its narrow technical sense remains absent from the 1932 Commercial Code. Although the 2005 Draft Bill introduced provisions to address this deficiency, the 2012 Draft Bill reverted largely to the existing legal framework, with the principal innovation being the recognition of preventive composition agreements (concordat préventif) prior to a formal bankruptcy declaration. The central inquiry of this study is thus: How does Iranian law conceptualize and regulate the restructuring of insolvent enterprises? It concludes that Iranian law lacks a coherent restructuring regime comparable to those adopted in advanced legal systems, and that even targeted legislative initiatives—such as the Law for the Protection of Industries and the Crisis Management Commission established under Article 138 of the Constitution—have failed to address this systemic gap. Accordingly, this area of Iranian commercial law demands comprehensive legislative reform, informed by comparative analysis and contemporary insolvency principles.