Insolvency law coming to address modern economy needs

Thursday, 29 June 2023 03:19 - - {{hitsCtrl.values.hits}}

The Cabinet of Ministers at its meeting on Monday approved the drafting of an insolvency law to meet the needs of a modern economy within three months.

The introduction of a new and comprehensive law on insolvency aims to provide a legal framework that better addresses the complexities and challenges faced by individuals, small businesses, and companies during times of financial distress.

The proposal authorises the Law Commission to engage in discussions with relevant stakeholders, draft preliminary legislation, and submit it within three months.

The current provisions, contained in the Insolvency Ordinance 1853 and the Companies Act No. 7 of 2007, have been deemed inadequate to meet the present requirements in terms of consumer insolvency, unincorporated small business insolvency, and company insolvency.

By consolidating and updating existing legislation, the Government intends to create a more efficient and effective system that supports the resolution of insolvency cases while protecting the rights and interests of all parties involved.

The reform of insolvency laws is crucial for fostering a conducive environment for economic growth and providing a safety net for individuals and businesses facing financial hardship. By streamlining and modernising these laws, Sri Lanka aims to encourage entrepreneurship, attract investment, and establish a framework that facilitates the orderly resolution of insolvency cases, minimising disruptions and maximising recovery for all parties involved.

In the coming months, stakeholders and the public will have an opportunity to engage with the preliminary drafts and contribute their insights to shape the final legislation.

The proposal to this effect jointly submitted by President Ranil Wickremesinghe and Justice, Prison Affairs, and Constitutional Reforms Minister Wijeyadasa Rajapakshe was approved by the Cabinet of Ministers at its meeting on Monday.