An international group operating in Georgia through a local subsidiary reaches a point where the business model no longer works. Debt has accumulated. A regional holding reshuffle is underway. Or a key creditor is threatening insolvency proceedings. The window for a controlled restructuring – one that preserves value and protects the parent's position – can close faster than foreign management expects. Georgia's commercial law environment is more developed than many outside observers assume, but it rewards preparation and punishes delay.
Corporate restructuring in Georgia can be pursued through voluntary corporate reorganisation – including merger, division, and transformation – or through court-supervised insolvency proceedings that include a formal restructuring plan. The key procedural requirements sit in Georgian corporate legislation and insolvency legislation, and most steps must be completed within strictly defined windows. For an international group, the process typically takes between two and eighteen months depending on the route chosen and the complexity of the creditor base.
This guide covers each available route step by step, sets out the documentary checklist for foreign entities. Identifies the errors that most often derail restructuring attempts by international clients. Additionally, provides a decision framework for choosing the right path in different business scenarios.
The restructuring landscape in Georgia: routes and legal foundations
Georgia has invested significantly in the accessibility and predictability of its commercial legal system. The country operates a civil law system with influences from German and continental European corporate law. Its insolvency legislation was substantially reformed over the past decade and now provides a relatively clear procedural regime for both voluntary and court-managed restructuring.
Three primary routes are available to an international group seeking to restructure its Georgian operations.
The first is voluntary corporate reorganisation. Under Georgian corporate legislation, a company may be reorganised through merger with another entity, division into two or more successor entities, or transformation into a different corporate form. Each route requires shareholder resolutions, creditor notification, and registration with the Saჯaro Reestr (National Agency of the Public Registry). No court involvement is required if creditors do not object within the statutory period.
The second route is out-of-court financial restructuring. This involves a negotiated agreement between the debtor and its principal creditors – typically banks and major trade creditors – to reschedule debt, convert debt to equity, or reduce the overall liability position. Georgian law does not impose a formal out-of-court framework equivalent to some Western European models, so this process is governed primarily by contract law and the terms of existing credit agreements. Speed is the main advantage: a well-negotiated agreement can be documented and effective within weeks.
The third route is court-supervised insolvency proceedings with a restructuring plan. Under Georgian insolvency legislation, a debtor or creditor may file for insolvency proceedings before the competent court. Once proceedings open, a moratorium on enforcement takes effect. An administrator is appointed to manage the estate and oversee the process. A restructuring plan – setting out revised repayment terms, asset disposals, or operational changes – may be submitted to creditors for approval and then confirmed by the court. If no viable plan emerges, the proceedings transition to liquidation, with a liquidator taking over asset realisation.
For international groups, the choice of route depends on the financial position of the Georgian entity, the composition of the creditor base, and the parent's strategic objectives. A group that is illiquid but commercially viable is the natural candidate for the insolvency restructuring route. A group that is solvent but structurally inefficient is better served by voluntary reorganisation. Understanding which test applies – and gathering the evidence to demonstrate it – is the first substantive task for any restructuring lawyer in Georgia.
For related insolvency and restructuring advisory in Georgia, the firm's dedicated practice is set out at bankruptcy and restructuring services in Georgia.
Step-by-step procedure for court-supervised restructuring
Court-supervised restructuring is the most significant and consequential route for a distressed international group. The procedure follows a defined sequence under Georgian insolvency legislation.
Step 1 – Filing the insolvency petition. The debtor or a qualifying creditor files a petition before the competent court. The petition must include a statement of the debtor's financial position, a list of creditors and their claims, and a description of the proposed restructuring approach. For a foreign-owned Georgian entity, the filing must be accompanied by authorisation documents establishing the signatory's authority. This typically means a notarised and apostilled power of attorney from the foreign parent. Missing or defective authorisation is the single most common cause of rejected petitions. Allow two to three weeks to obtain correctly apostilled documents from abroad.
Step 2 – Court acceptance and moratorium. Once the court accepts the petition – typically within one to two weeks of filing – a moratorium on individual creditor enforcement takes effect automatically. Creditors may not attach assets, enforce security, or pursue debt recovery during the moratorium. This protection is one of the most commercially valuable features of the Georgian insolvency regime. An international group facing aggressive creditor action should treat the moratorium window as a strategic asset.
Step 3 – Appointment of the administrator. The court appoints an administrator to take over management of the debtor's affairs or to supervise management, depending on the court's order. The administrator is a licensed insolvency professional under Georgian law. Their role includes verifying the debtor's financial position, compiling the creditor register, and facilitating the restructuring plan process. The relationship between the administrator and the foreign parent is critical. In practice, the administrator holds significant influence over the trajectory of proceedings. Experienced local counsel should be engaged to manage this relationship from the outset.
Step 4 – Proof of debt submissions. Creditors must submit a proof of debt to the administrator within the period set by the court – typically thirty to sixty days from the date of public notice. Each proof of debt must document the basis of the claim, the amount, and any security held. Creditors who miss this deadline risk exclusion from the creditors' register and loss of voting rights. For international groups with related-party creditors – parent loans, intercompany balances – the proof of debt documentation must be prepared with particular care. Courts in Georgia scrutinise related-party claims closely, and inadequately documented claims may be rejected or subordinated.
Step 5 – Preparation and submission of the restructuring plan. The debtor, with the administrator's assistance. Prepares a restructuring plan setting out how the business will be reorganised and how creditors will be repaid or otherwise satisfied. The plan must address the treatment of each class of creditors, the operational changes proposed, and the projected financial outcomes. A realistic financial model is essential. Plans that lack credible projections are routinely rejected at the creditors meeting stage.
Step 6 – The creditors meeting. The administrator convenes a creditors meeting at which the restructuring plan is put to a vote. Under Georgian insolvency legislation, approval requires a qualified majority of creditors by value in each class. Secured creditors and unsecured creditors vote separately. Achieving the required majority often requires pre-meeting engagement with key creditors – particularly institutional lenders, who typically have defined internal approval processes. International groups underestimate this step. A plan that is technically sound but lacks creditor buy-in before the meeting will fail.
Step 7 – Court confirmation. Following creditor approval, the plan is submitted to the court for confirmation. The court reviews procedural compliance and whether the plan meets statutory requirements for fairness and feasibility. Once confirmed, the plan becomes binding on all creditors in the relevant classes – including dissenters. The confirmation hearing typically takes place within two to four weeks of the creditors meeting.
Step 8 – Implementation and discharge. The debtor implements the confirmed plan under the ongoing supervision of the administrator. Once obligations under the plan are fulfilled, the administrator reports to the court and proceedings are formally closed. Implementation periods vary widely – from several months for a simple debt rescheduling to several years for complex operational restructurings.
To receive a tailored assessment of your group's restructuring options in Georgia, contact us at info@ferrazwhitmore.com.
Documentary checklist and common errors by foreign clients
Foreign groups entering Georgian restructuring proceedings routinely face procedural delays that are entirely avoidable. The root cause is almost always documentary: documents that are missing, incorrectly legalised, or issued in the wrong format under Georgian procedural rules.
The core documentary requirements for a foreign-owned entity in Georgian insolvency proceedings are as follows:
- Notarised and apostilled power of attorney authorising local counsel and any local representative to act in proceedings
- Certified translation into Georgian of all foreign-language corporate documents
- Up-to-date extract from the foreign company's home jurisdiction commercial register, apostilled and translated
- Board resolution or equivalent authorisation document approving the filing and authorising named signatories
- Audited financial statements of the Georgian entity for the most recent completed financial year
Several errors appear with particular regularity.
Apostille obtained in the wrong jurisdiction. The apostille must be issued by the competent authority in the country where the document was executed – not where the parent company is headquartered, if those are different. A UK company with documents executed in the Netherlands needs a Dutch apostille. This sounds straightforward, but multi-entity groups frequently make this error.
Powers of attorney drafted too narrowly. Georgian courts require that the power of attorney explicitly grants authority for each category of procedural action. signing petitions, attending hearings, voting at creditors meetings, and executing plan documents. A general commercial power of attorney is typically insufficient. The document must be tailored to insolvency proceedings.
Failure to notify related-party creditors in time. Where the foreign parent or group affiliates hold claims against the Georgian entity, those claims must be filed as proof of debt within the court-set deadline. Many foreign groups assume that related-party claims will be automatically included. They are not. A parent loan that is not filed as a proof of debt in time may be excluded from the creditors register entirely.
Underestimating the administrator's role. Some foreign management teams treat the administrator as a passive administrator. In practice, the administrator holds significant discretion over how the creditor register is compiled, how the restructuring plan is presented, and how implementation is monitored. Early and constructive engagement with the administrator – through local counsel – materially improves outcomes.
Attempting self-representation. Georgian insolvency proceedings are conducted in Georgian. All court filings must be in Georgian. Foreign management or foreign lawyers without local authorisation cannot appear before Georgian courts. The practical consequence of attempting to manage proceedings without a qualified lawyer in Georgia is procedural rejection at the earliest stages.
Cost ranges for Georgian restructuring proceedings vary depending on route and complexity. Court filing fees are relatively modest by international standards – typically in the range of hundreds of Georgian lari for initial filings. Administrator fees are set by the court and calculated by reference to the value of assets under administration. Legal fees for qualified local counsel engaged throughout proceedings start in the range of several thousand US dollars for straightforward matters and scale significantly for multi-creditor or cross-border proceedings.
Where a Georgian restructuring intersects with disputes between shareholders or with contested creditor positions, the procedural overlap with corporate disputes law becomes relevant. The firm's approach to those matters is addressed at corporate disputes in Georgia.
Decision framework: choosing the right route for your scenario
Not every distressed situation calls for court-supervised insolvency proceedings. Choosing the wrong route wastes time, exposes the group to unnecessary risk, and can permanently damage relationships with key creditors and counterparties. The following framework helps international groups identify the appropriate path.
Scenario A – The group is solvent but structurally misaligned. A foreign holding company has accumulated multiple Georgian subsidiaries through acquisitions. Consolidation into a single operating entity would reduce costs and simplify regulatory compliance. There are no material creditor objections expected. The correct route is voluntary merger or division under corporate legislation. The process involves shareholder resolutions in each entity, public notice of the intended reorganisation, a creditor objection period of typically thirty days, and registration of the resulting entity. Total elapsed time: two to four months.
Scenario B – The group is illiquid but the business is commercially viable. A Georgian operating company has missed debt service payments due to a temporary revenue shortfall. The core business is sound. The principal creditor is a Georgian bank with a floating charge over business assets. The bank has not yet filed for enforcement. This scenario calls for an urgent out-of-court negotiation with the bank, supported by a revised financial model. If the bank agrees to a standstill and rescheduling within four to six weeks, court proceedings can be avoided entirely. If the bank refuses, a voluntary insolvency filing with a pre-negotiated restructuring plan – known informally as a pre-pack approach – may preserve the moratorium benefit while avoiding prolonged proceedings.
Scenario C – Multiple creditors, enforcement risk is immediate. Several creditors have filed enforcement claims. The moratorium available under court-supervised insolvency proceedings is the only instrument that can freeze all enforcement simultaneously. Filing the insolvency petition within days – rather than weeks – is the priority. Delay here means that individual creditors may attach and realise assets before the moratorium takes effect. Once a major asset is lost, the restructuring plan becomes materially harder to sustain.
Scenario D – The Georgian entity is part of a multi-jurisdiction group undergoing regional restructuring. This scenario requires simultaneous coordination of proceedings across two or more legal systems. Georgian insolvency legislation does not contain a fully developed cross-border insolvency regime equivalent to the UNCITRAL Model Law adopted in a number of other jurisdictions. Recognition of foreign insolvency proceedings in Georgia is handled on a case-by-case basis through general civil procedure rules. International groups should not assume that a restructuring plan confirmed in a foreign proceeding will automatically bind creditors in Georgia. Parallel Georgian proceedings may be necessary. For groups comparing approaches across CIS jurisdictions, the guide to corporate restructuring in Russia provides a useful comparative reference.
The self-assessment checklist. Court-supervised restructuring in Georgia is the appropriate route if all of the following apply:
- The Georgian entity is unable to meet its debts as they fall due
- The core business has demonstrable going-concern value
- There are multiple creditors whose claims cannot be resolved individually
- Enforcement action by one or more creditors is imminent or already initiated
- The group has the capacity to prepare a credible restructuring plan within sixty to ninety days
If the entity is insolvent with no viable business to preserve, the trajectory moves from restructuring toward liquidation – and the appointment of a liquidator will follow. Recognising that threshold early, and filing promptly, protects directors from personal liability exposure under Georgian corporate and insolvency legislation.
For a preliminary review of your group's restructuring position in Georgia, email us at info@ferrazwhitmore.com.
Frequently asked questions
Q: How long does a corporate restructuring process take in Georgia?
A: A voluntary reorganisation through merger or division can be completed in as little as two to four months, provided all documentary requirements are met upfront. Court-supervised insolvency proceedings, including a restructuring plan confirmed by the court, typically take six to eighteen months depending on creditor complexity and asset composition. Delays are most common where proof of debt submissions are incomplete or where a creditors meeting fails to reach the required majority on the first vote.
Q: Does a foreign parent company need to appear before Georgian courts during restructuring?
A: In most cases, a foreign parent does not need to appear in person. A duly authorised local representative or administrator can act on behalf of the foreign entity throughout insolvency proceedings and corporate reorganisation steps. However, original powers of attorney must be apostilled or legalised, and local counsel must hold explicit authority to sign procedural documents. Missing or defective authorisation is one of the most common reasons for procedural delays in Georgian restructuring cases involving foreign groups.
Q: Is a restructuring plan binding on dissenting creditors in Georgia?
A: A common misconception is that any single creditor can block a restructuring plan. Under Georgian insolvency legislation, a plan confirmed by the required creditor majority at a creditors meeting and subsequently approved by the court becomes binding on all creditors in the relevant class. This includes those who voted against it. However, dissenting creditors retain the right to challenge procedural irregularities before the court within the prescribed appeal window.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our team combines Portuguese civil law expertise with English common law tradition to deliver cross-border legal solutions in corporate restructuring, insolvency proceedings, and creditor-debtor advisory. In Georgia and across the CIS region, we support international entrepreneurs, institutional investors, and in-house legal teams who need results-oriented counsel when financial stress reaches a critical point. As a law firm serving international groups in Georgia, we bring direct experience of multi-jurisdiction restructuring where proceedings in Tbilisi interact with parallel processes in European and CIS holding structures. Our insolvency and restructuring practice covers proceedings before Georgian courts, administrator and liquidator engagement, restructuring plan drafting, and creditors meeting strategy. The firm's Lisbon base provides direct access to Portuguese and EU regulatory systems, while our CIS expertise supports enforcement and restructuring strategies in Georgia and neighbouring markets. Engaging a lawyer in Georgia with cross-border experience is essential where a Georgian restructuring forms part of a wider group reorganisation. To discuss your restructuring situation in Georgia, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.