Industry, Investment and Commerce Minister, Hon. Anthony Hylton, says his Ministry fully endorses the process to reform the country’s insolvency law to reflect the realities of the modern global business environment.
Insolvency refers to the inability of an organisation to meet its financial obligations with its lender(s) as debts become due. It can lead to legal action being taken against the company or the assets of the company may be sold to repay lenders.
Speaking at a seminar on insolvency law reform at the Knutsford Court Hotel in Kingston yesterday (April 17), Mr. Hylton said the country’s insolvency law, which has remained largely unchanged since the advent of the Bankruptcy Act and the Companies Act of 1965 is outmoded.
He said that steps have been taken over the years to update the statute, pointing to the Insolvency Legislation Committee established by the Ministry of Justice in 2005 to review and recommend changes necessary for the modernisation and improved efficiency in the administration of insolvencies.
He noted as well that in 2009, Jamaica Promotions Corporation (JAMPRO) through the Private Sector Development Programme, had requested that a review be conducted to determine the reforms required to improve the existing legislation to create a unified code for bankruptcy and corporate insolvency. The entity had made a report detailing the required reforms, including several recommendations.
According to the Minister, reform of the insolvency and bankruptcy laws are of paramount importance, not just in terms of streamlining the process, but in also establishing a framework that increases foreign direct investment (FDI) to Jamaica, encourages greater risk taking, is more predictable, and removes the stigma associated with business failure.
“We must seek to ensure that our insolvency laws do not punish genuine business effort that they do not result in otherwise profitable business opportunities overtaking us, simply because the costs of possible failure are high,” he said.
Mr. Hylton said that any regime to be put in place must provide efficient, impartial and fair procedures to help in expeditious settlements of bankruptcy cases, and assure investors and other market participants that the law will intervene to protect their legitimate expectations and interests.
“Ultimately, we need to put in place insolvency laws that effect a balance between the needs of genuine entrepreneurs and business entities for protection, while protecting creditors, and consumers and other stakeholders from irresponsible and imprudent business arrangements. This is an important element of the regime of economic justice that must become an integral part of the business culture in our country,” he said.
The seminar, hosted by law firm, Myers, Fletcher and Gordon, was geared at informing the public of the current status of the law and the proposed changes relating to insolvency.
By Alecia Smith-Edwards, JIS Reporter