Sat | Dec 7, 2019

No supervisor as yet for insolvency bill

Published:Tuesday | October 14, 2014 | 12:00 AM

Daraine Luton, Senior Staff Reporter

DESPITE BEING hailed as a fillip for economic growth, the insolvency bill, which was passed in the House of Representatives last week, will not have any real effect on the business landscape until the creation of an authority to manage cases.

However, the industry minister, Anthony Hylton, has refused to commit to a timeline by which that entity will be up and running.

The insolvency bill allows for a supervisor to receive all records and management bankruptcy proceedings and make rulings outside of a court setting. The Office of the Trustee in Bankruptcy and the Financial Services Commission are being considered as possible supervisors under the bill.

"The joint select committee thought that the court-centred approach was not the way to go given the state of our courts as it would be adding burden to it, and while the court will have a role, we tried as best as possible to avoid the court-centred approach and put in place this approach, which is aimed at settling these matters quickly," Hylton said.

The insolvency bill allows for the reorganisation of businesses that are facing bankruptcy and puts in place structure to allow a just distribution of assets in the event of business failure. The bill, even when passed into law, cannot be operationalised until the supervisor is in place.

"The Cabinet has to decide who will be the supervisor. In this period, we have to look at the fiscal constraints. We have to look at the cost of establishing it, for example," Hylton said.

"The role of the supervisor is critical, but we will work assiduously to make sure that we do the full assessment of what it would cost to set up, what we need to start off - whether we need something simple ... . It could be a very involved process, but we aim to move as quickly as possible," said the minister.

No timeline given

He added that he could not say at this point how long it would take to get the supervisor up and running.

The insolvency bill is a companion to the Securities Interest in Personal Property (SIPP) Act, which Hylton said encourages enterprise and risk-taking.

The SIPP was recently passed into law and willallow the use of non-traditional assets such as crops as collateral to secure loans. However, speaking at a Gleaner Editors' Forum recently, some of the nation's top bankers said the SIIP cannot work without regulations. Hylton told The Gleaner that financial institutions were involved in the development of the law, but stressed that now that an issue has been identified, he will be meeting with players in the banking sector.