The Law Reform Commission (LRC) is opting for a timely passage of the draft Insolvency and Restructuring Act in order to protect creditors and debtors in Liberia.
The Insolvency and Restructuring Act is a proposed legislation introduced to repeal the "outdated" Fraudulent Conveyance Act that had been in existence for many years.
Addressing a hearing called by members of the House's Committee on Judiciary on the draft law, LRC through its Chairman, Dr. Jallah A. Barbu, recommended the "timely pass of the bill as its passage will provide many critical benefits to business people and even individuals."
Dr. Barbu noted that the draft legislation received the endorsement of not only the foregoing important stakeholders who are the end users, but also the key relevant agencies of government, especially, the LRC and the Ministry of Justice, and as such, he expressed the need for the Legislature to play its part.
He described the current status of the bill as an instrument that gives "an easy task to legislators in further deliberations in order to pass the bill."
Cllr. Barbu informed the public that all relevant stakeholders have agreed to the structure and general contents of the Insolvency Bill, adding; "The business community, bankers including the Central Bank of Liberia have all endorsed this bill."
Providing benefits of the draft legislation, Cllr. Barbu indicated that the bill provides detail legal procedures by which businesses having financial trouble and/or that have become insolvent may still manage to rebound.
Dr. Barbu: "For the first time, this law will give Liberian businesses the opportunity to enjoy relief from creditor in a more formal and structured way that is comparable to the Chapter 7 and/or Chapter 11 protection business enjoyed 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.
Because of the natural tendency for everyone to rush to get what is owed him or her by a person facing financial trouble, this law provides the details 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.
Another key benefit of this law is that it provides detailed procedures of how to divide the few assets that may remain with a business that has failed. The law also provides means by which a business that is not able to pay its debts cannot keep operating perpetually and thereby incurring more debts that it cannot pay."
Also in speech, the Chairman of the House's Committee on Judiciary Representative Garya Karmo reminded the audience of two critical perimeters, practical and legal, that should be considered when enacting a law.
As for practical, the Bomi County lawmaker intoned that timing, especially the mood of the public on the issues and content of the proposed law and the relevance of the laws whether to create a new law or modify an existing law with a clear legislative intent to strengthen an existing law, express an approval or disapproval or certain circumstances in the public domain.
He praised the drafters, however, stressing that the process is on and his committee will make report to plenary before the bill is passed or rejected.
The forum brought together several lawmakers, business representatives and renowned lawyers including Cllr. Negbalee Warner.
The program was held upon the request of Margibi County Representative Ben Fofana, who is also a member of the Judiciary Committee.