RDB to set up insolvency desk

Rwanda Development Board is set to establish an insolvency desk to educate the public on the benefits to address the challenge of solving insolvency as highlighted in the recently unveiled Doing Business Report.Search for a lawyer is ongoing and targeting to have the desk established by the end of this month, an RDB official revealed to Business Times. Karim Tushabe, the legal consultant at the Doing Business unit of RDB explained, the lawyer will be tasked with educating the public on how struggling companies can obtain legal advice to help them restructure or liquidate if need be.“Being something new, the mindset isn’t to the level we want it to be, and having no companies filing for insolvency, we get to know that people are not aware of the benefits,” Tushabe explained.He disclosed that only four companies have filed for insolvency to date, which is slightly lower than the World Bank benchmark of at least five companies per year.“It’s the hardest part in the reforms but most of the essentials are in place, (including) good laws, judges; commercial courts are working well but we need to create awareness,” he noted. He added: “We know some companies are struggling, but the fact that they are not filing for insolvency, the problem is that they don’t know its benefits.”The Doing business report in EAC indicates that a firm that is beset by bad management choices or temporary economic downturn may be turned around to preserve the value and the jobs created. Tushabe noted that RDB and implementing institutions have so far achieved 60 per cent of the doing business report indicators as published by the World Bank in October last year, with hope to implement the remaining 40 percent before end of May. “After every WB report, we look at where we have scored well in comparison to where we performed poorly to lay our action plan,” he stated. He noted that the foreclosure and the mortgage law overshadowed the insolvency law because it is easier to settle their problems through the acquisition of the right to sell.He added that the process would involve the appointment of specific judges to handle insolvency cases this year.Apart from solving insolvency, Rwanda also performed poorly in certain indicators including trading across borders and registering property.To improve trading across borders, traders were sensitised on pre-clearance, where goods are cleared at points of entry to save time upon arrival.Through Rwanda Revenue Authority, the business hours were increased to 16 hours up from 12 hours at Rusumo on the Rwanda-Tanzania border, Cyanika which borders Uganda, and Magerwa.Rwanda enacted a new insolvency law aimed at reorganising the procedures as a viable option for distressed firms.Uganda leads the region in the indicator at position 64 while Rwanda ranked 165 out of 183 surveyed countries.

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RDB to set up insolvency desk