Passage of Insolvency Bill suffers fresh setback
The Ghana Association of Restructuring and Insolvency Advisors (GARIA) would have to wait a little longer before its dream of getting a bill that would regulate its operations in the country would be laid before parliament.
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This is because the Corporate Insolvency Bill, which was due to be laid before Parliament early next year, has suffered another setback due to the change in the administration of the country.
With the New Patriotic Party (NPP) to replace the National Democratic Congress (NDC) on January 7, the Bill, which had already received Cabinet approval from the outgoing President John Mahama’s administration, would now have to be laid before the Cabinet of the incoming government’s administration for approval again before it can then be laid before Parliament.
The President of GARIA, Mr Felix Addo, said this in an interview with the GRAPHIC BUSINESS at the association’s end of year dinner in Accra.
Role of Insolvency Bill
The Corporate Insolvency Bill is expected to provide a framework for restructuring viable but temporarily distressed businesses.
It is also expected to promote efficient closure and transfer of assets of businesses that are no longer viable, while providing a proper framework for the winding up of businesses, whereby 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.
But given that, the association was unsuccessful in laying the bill in Parliament, this year, Mr Addo said the change in power meant that the its passage will be delayed.
He was, however, hopeful that the incoming administration would endeavour to pass the bill into law within the shortest time possible.
Effective insolvency laws
Mr Felix Addo 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.
Year under review
Mr Addo pointed out that the year 2016, was a successful one as the association participated in the INSOL international conference in Dubai.
He said the association in collaboration with INSOL and the World Bank Group also organised an African Roundtable (ART) Conference, which was held on the theme “freedom to fail? insolvency for micro, small and medium enterprises.”
Mr addo also noted that the association celebrated its 10th anniversary in August this year and also moved into its new office located on the 7th floor of the SSNIT Emporium building.