Registrar challenges creditors to make use of insolvency law

The Registrar of Companies, Louise Kanyonga, has challenged creditors to utilise the insolvency law when seeking payment from their debtors who have gone bankrupt as a way of facilitating timely payment of debts. Before the law which was passed in 2009, creditors were required to go to courts to file a case, which was time consuming as opposed to the insolvency law where an administrator is appointed to manage the assets for the insolvent company.However, most people in Rwanda are not aware of the law and cannot therefore use it in situations where their debtors have gone bankrupt leading to loss of money.“The insolvency process offers a lot more of flexibility for the administrator to get the best value possible for those assets,” she added.The insolvency law applies when the company runs bankrupt and is unable to pay its creditors in time, a situation that would lead to company creditors losing their money.“In our long-term plans for the year we have capacity building for the Judiciary to understand their roles in insolvency proceedings,” she saidKanyonga notes that the law will also maximise value of the debtor’s assets and also ensure fair treatment of creditors. She added; “The law also helps the insolvent company from accumulating more debts.”In insolvency proceedings, a group of creditors, the board or the registrar general can file an insolvency proceeding to a commercial court. Since its inception, the law has seen five cases resolved through the commercial court with the main one being Rwandatel that was liquidated last year.The Registrar General filed insolvency proceedings in a commercial court against Rwandatel which had accumulated $88.9 million in debt. The telecom company was liquidated and its property, worth $50 million, put on sale to recover money to pay back creditors.Francois Kanimba, the Minister of Trade and Industry, says that the slow pace at which the law is being applied is responsible for the country’s poor performance in the World Bank’s annual doing business report, particularly the indicator on resolving insolvency.“The process that is going on (implementing the Insolvency law) is good but long overdeu the minister noted.This year, Rwanda was ranked 163 out of 183 countries on the resolving insolvency indicator which is part of the ten indicators used to rank countries on the ease of doing business even as it emerged the 5th best place to do business in all indicators.

News

Registrar challenges creditors to make use of insolvency law