Corporate Insolvency Bill to be laid before Parliament
The Ghana Association of Restructuring and Insolvency Advisors (GARIA) is to lay before Parliament the Corporate Insolvency Bill, which is expected to provide a framework for restructuring viable but temporarily distressed businesses.
Advertisement
The bill is also expected to promote efficient closure and transfer of assets of businesses which are no longer viable and a proper winding up of businesses where the members, for other reasons, decide to cease operations.
This forms part of the reform agenda of the association to set the legal framework for corporate bodies and their administrators when they become insolvent.
The association was unsuccessful in laying the bill this year and would, therefore, reintroduce it in 2017.
The President of GARIA, Mr Felix Addo, who disclosed this in an interview with the GRAPHIC BUSINESS at the Africa roundtable on insolvency reform in Accra, said effective and efficient insolvency laws and institutions were critical for economic growth.
He said in Ghana, most companies faced serious financial problems and most financial institutions carried huge non-performing loan portfolios.
“In such an environment, it is imperative that effective insolvency laws and institutions are established,” he stated.
“Companies do go through trying times and, therefore, need restructuring under a supervisory regime so you don’t abuse your creditors”, he added.
Purpose of the Bill
Mr Addo said the bill, when passed into law, would provide a framework for the regulation of insolvency practitioners and also facilitate access to timely, efficient and impartial insolvency proceedings.
He noted that it would also reduce the burden of insolvency through potentially higher and equitable distribution of assets of failed companies to creditors as well as provide the framework for effective creditor participation in insolvency proceedings either directly or through the creditor’s committees.
“The new law would also permit insolvency practitioners to accept appointment as liquidators of insolvent companies”, he said.
Impediments that cause the insolvencies
The Board Chairman of the Standard Chartered Bank, Dr Ishmael Yamson, also said at the forum that while seeking to ensure there was robust insolvency laws, there must be a direct correlation between insolvency and the business environment.
He said the association must engage government and the public sector managers to first remove those impediments that cause the insolvencies.
“Over the past 50 years that I have been an active player in the private sector, I have come to the conclusion that unless government promotes sustained, predictable, enabling macro-environment and an efficient and competitive micro-environment, businesses cannot perform, grow, create jobs and cannot generate employment and contribute to wealth creation”, he mentioned.
He said African governments had to go back to the basics and establish a credible, stable and enabling macro-economic environment for businesses to function.
“Even more importantly, African countries must take definite measures to liberate and empower their businesses to become efficient, productive and strong. Businesses, together with government, have the capacity to make Africa shine again but this can only happen if the impediments suffocating them and hindering their growth are removed,” he stated.
