By Morrison O.G. Sayon
The Chairman of the Law Reform Commission (LRC), Cllr. Jallah Barbu, has recommended to members of the National Legislature to consider the passage of the proposed Insolvency Law.
Giving background of the Insolvency Law at a Legislative Hearing on the Proposed Insolvency Law held at a local hotel on Wednesday, Cllr. Barbu said the key benefit of the law is that it provides detail legal procedures by which businesses having financial trouble and/or that have become insolvent may still manage to rebound.
Cllr. Barbu noted that for the first time, the law will give Liberian businesses the opportunity to enjoy relief from creditors in a more formal and structured way that is comparable to Chapter 7 and/or Chapter 11 protections business enjoy in the United States.
“The central feature of these protections and all insolvency laws (including this bill) is the establishment, recognition and adherence to a systematic process of deciding whether a business is broke partially or completely, and if so, whether it can be revived if its creditors are told to defer for a given period the collection of all debts owed them by the so-called broke business,” the Law Reform Commission boss said.
He said because of the natural tendency for everyone to rush to want to get what is owed him or her by a person facing financial trouble, the law provides the detail measures that will be in place to encourage and assure everyone about the benefit of seeing that every business that has a chance to make it is given some time to work it out, while those that do not have any prospect of turning the corner are immediately subjected to liquidation.
According to Cllr. Barbu, another key benefit of the law is that it provides detailed procedures of two to divide the few assets that may remain of a business that has failed. He added that the law also provides means by which a business which is not able to pay its debts cannot keep operating perpetually and thereby incurring many debts that it cannot pay.
Cllr. Barbu said all relevant stakeholders have agreed to the structure and general contents of this Insolvency bill adding that the business community and the bankers have all agreed, and also the Ministry of Justice and the Law Reforms Commission responsible to advice on the making of laws have also endorsed this bill.
He then recommended the timely passage of the bill as its passage will provide many critical benefits to business people and even individuals.
Some of the lawmakers who attended the hearing including Rep. Cllr. S. Gayiah Karmo and Ben Fofana assured the public that they will lobby with their colleagues in the House of Representatives and the Liberian Senate to ensure that the bill is passed for the benefit of the Liberian people.