Tashkent, Uzbekistan (UzDaily.com) — During a session of the Legislative Chamber of the Oliy Majlis, lawmakers conceptually reviewed and approved the draft law “On Amendments and Additions to Certain Legislative Acts of the Republic of Uzbekistan in Connection with the Further Improvement of the System for Satisfying Creditors’ Claims Secured by Collateral” in its first reading.

The discussions emphasized that significant efforts have been made in recent years to ensure the prioritization of creditors’ rights regarding collateral provided as security for obligations and to simplify the process of selling collateral through auctions. However, practical issues and contradictions persist, particularly regarding the timely and proper fulfillment of obligations by debtors under credit (mortgage) agreements and the enforcement of claims on collateralized assets, both judicially and extrajudicially.

The draft law was developed to strengthen creditors’ priority rights over collateralized assets, simplify the auction process for selling such assets, and set the initial sale price based on market value with the involvement of independent appraisal organizations. A key aspect of the draft is the improvement of extrajudicial procedures for recovering obligations secured by collateral.

During the discussions, lawmakers emphasized the importance of protecting the rights of entrepreneurs when seizing collateralized property for crimes or violations. At the same time, secured creditors retain the right to priority satisfaction of their claims from such property and the right to lift restrictions on its disposal.

According to the lawmakers, adopting this draft law will ensure the prioritization of creditors’ rights concerning collateralized property, improve the extrajudicial system for collateral realization, simplify the process of fulfilling obligations through collateral assets, and reduce the share of non-performing assets in financial institutions’ loan portfolios.

The draft law was approved in the first reading.