New bankruptcy law in Jamaica
KINGSTON, Jamaica, Oct 18, CMC – Parliament has given the green light to the Bankruptcy and Insolvency Act, 2014, ensuring that businesses no longer face closure when facing bankruptcy.
The Senate has approved the legislation with 43 additional amendments, following passage in the Lower House with 100 amendments.
Prior to its passage, the Jamaican law on bankruptcy and insolvency was contained in two pieces of legislation – the Bankruptcy Act, which covered personal and individual insolvency, and the Companies Act, which dealt with the winding up of insolvent corporate bodies.
The Bankruptcy legislation dated back to the 1880s and had been the subject of ad hoc amendments over the years. The procedural rules of the Act were not only outdated, but also conflicted with the rules that govern other court proceedings.
The new law deals with bankruptcy, insolvency, receiverships, provisional supervision and winding up. It seeks to accommodate corporate and individual insolvency; and facilitate the rehabilitation of an insolvent debtor.
Additionally, it proposes to repeal the Bankruptcy Act, and matters connected with, or incidental to that Act, including amendment of the Companies Act.
The introduction of the new legislation is expected to make the insolvency process less time-consuming and costly, and will seek to address the stigma of personal bankruptcy or corporate insolvency.
According to the World Bank’s Doing Business Report 2013, resolving insolvencies in Jamaica takes 1.1 years on average and costs 18 per cent of the debtor’s estate.
Under the new law, the interests of all stakeholders will be given due consideration. It also makes provisions for rehabilitation or re-organisation of the business affairs of the debtor. In addition, a licensing regime for insolvency practitioners is also to be introduced.
Justice Minister Mark Golding, who piloted the Bill, acknowledged “it is a very major piece of legislation, a very complex piece of legislation and some 309 sections long, and it has taken a lot of effort from very many people to get us to this point and I think we have a good Bill”.
Opposition Senator, Nigel Clarke agreed that the bill was a “monumental” piece of legislation which is highly technical and complex, “and it’s probably the longest Bill to be introduced since the Companies Act of 2004.
“Taken together with the Secured Interest in Personal Property legislation, this represents a quantum leap in the legal and commercial architecture designed for a modern economy, and I am an enthusiastic supporter of the Bill, as I believe it is of fundamental importance to the emergence of the kind of vibrant economy that we all want,” said Clarke, who was a member of the Joint Select Committee of Parliament mandated to review the legislation.
“The Joint Select committee met over 20 times over eight months, going through clause by clause of the original Bill, and meeting on Saturdays and Sundays as required,” he said.
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