JIS News

Story Highlights

  • The House of Representatives, on October 7, passed the Insolvency Act, which seeks to consolidate the law relating to bankruptcy, insolvency, receiverships, provisional supervision and winding up.
  • The legislation repeals the Bankruptcy Act, and matters connected with, or incidental to that Act, including the amendment of the Companies Act.
  • The Bill seeks to create an environment, which support the rehabilitation of debtors and the preservation of viable companies, having due regard to the protection of the rights of creditors and other stakeholders.

The House of Representatives, on October 7, passed the Insolvency Act, which seeks to consolidate the law relating to bankruptcy, insolvency, receiverships, provisional supervision and winding up.

The legislation repeals the Bankruptcy Act, and matters connected with, or incidental to that Act, including the amendment of the Companies Act.

Minister of Industry, Investment and Commerce, Hon. Anthony Hylton, said the Bill seeks to create an environment, which support the rehabilitation of debtors and the preservation of viable companies, having due regard to the protection of the rights of creditors and other stakeholders.

Under the existing legislation, the interests of creditors are given paramount consideration above all stakeholders. Also, it makes little or no provision for rehabilitation or re-organization of the business and affairs of the debtor.

“If we are serious about growing the Jamaican economy, if we want to create jobs, if we want to encourage new business start-ups and foster entrepreneurship, then changes will have to be made to the existing law,” Mr. Hylton said.

He noted that the legislation also supports the fair allocation of the costs of insolvencies with the overriding interests of strengthening and protecting the country’s economic and financial system, and the availability and flow of credit within the economy.

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.

“A modern framework for resolving business insolvency will help fuel the economy with huge benefits to society in ways not available in a liquidation only system. It allows for a greater return for creditors, for protecting assets, for the saving of jobs, for suppliers to keep their customers, and for owners to retain a viable company,” Minister Hylton said.

The Act makes a distinction between property and income of an individual bankrupt, and recognizes that an individual bankrupt requires income to pay basic living expenses and, balancing that with the interests of creditors in being paid, provides for a bankrupt to pay a portion of his income to the trustee for the benefit of creditors.

The Bill also provides for Regulations to prescribe a list of property of an individual bankrupt that will not vest in the trustee. This is property that is necessary for the bankrupt to live and continue to earn income.

In his comments, Opposition Spokesman on Finance, Audley Shaw noted that the legislation “will make our system more modern than even many of our Caribbean partners.”

“I think, by far, the most significant feature of this Bill is the fact that it will allow companies and individuals the opportunity to rehabilitate their financing before entering into bankruptcy and it is a long time in coming, it should have come a long time ago,” Mr. Shaw said.

The Bill was passed with 100 amendments and will be sent to the Senate for its approval.