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Martin Kadzere Harare Bureau
ZIMBABWE has started working on insolvency law reforms to overcome challenges related to the rapidly changing economic environment in the country. Among the key reforms identified by stakeholders are the legal, regulatory and operational regime for insolvency, bankruptcy and judicial management of local companies, according to Law Development Commission deputy chairman Joel Zowa.
The Law Development Commission is a statutory body responsible for, among other things, promoting development of laws, reviewing the law and its administration and making proposals for elimination from the law of any defects of a policy.
It also makes proposals for bringing the law into accord with current national and international trends.
Some of key priorities identified by various stakeholders include legislative reforms, which would encompass the development of a unified insolvency law that consolidates the elements of insolvency relating to corporates and individuals.
Under the legislative reforms, the focus would also be on developing a coherent insolvency and business rescue regime consistent with international best practices.
In addition, the reforms will focus on developing a regime for out of court workouts, an approach that will keep potentially viable, but distressed businesses alive instead of liquidation.
This would enable creditors to recover part or all of what they would be owed, preserve jobs and sustain customers and the supplier network.
In recent years, many creditors failed to recover substantial amounts when the companies owing them were either placed under judicial management or curatorship in the case of banks.
When a business is declared insolvent, its current liabilities exceed current assets meaning that entity may not be able to repay debts.
The business will face insolvency proceedings or liquidation sanctioned by the court. In some cases, some companies may be placed under judicial management or curatorship, but this did not yield positive results in Zimbabwe in terms of turning around struggling entities.
The reforms also seek practical training for insolvency practitioners, capacity building for the Master of High Court office and regime for licensing insolvency practitioners.
Zowa said the capacity development is yet to be determined but would include peer to peer learning events across other similar jurisdictions.
The Law Development Commission, in partnership with the World Bank intends to host a workshop today to deliberate and assess the effectiveness of the proposed reforms which is expected to be attended by various stakeholders including banks.
Insolvency managers and captains of industry are among other stakeholders expected to attend the meeting.
Online Reporter
Londile Moyo