RESOLVING INSOLVENCY AND ENFORCING CONTRACTS

The Technical Working Group on Resolving Insolvency and Enforcing Contracts aims to reduce the time and costs of enforcing contracts and to reduce the time of resolving insolvency issues from 45 months to less than 12 months.

By May 30, the government aims to:

  • Educate the public about the creation of a commercial court.
  • Sensitise the public on the importance of amending resolving insolvency law.
  • Raise awareness about the changes in the Estate Administrators Act to foster an easier business environment.

 

REFORMING THE INSOLVENCY LAW:

Fostering an enabling environment for reorganizing and rescuing troubled companies

An effective bankruptcy system works as a filter, ensuring the survival of economically viable companies and reallocating the resources of inefficient ones. Fast and inexpensive insolvency processes support the speedy return of businesses to normal operations and the increase returns to creditors. By improving the expectations of creditors and debtors about the outcome of insolvency proceedings, well-functioning insolvency systems can facilitate access to finance, save more viable businesses and thereby improve growth and sustainability in the overall economy.

 

The Government is in the process of strengthening and reforming key aspects of the insolvency and creditor rights law. In particular, the Government seeks to reduce the average period for resolving insolvency issues from the current 45 months to less than 12 months. This is also expected to increase the average recovery rate for creditors from the current 13.3%. The reforms will promote an enabling environment to support re-organizing and rescueing troubled companies. In addition, the consolidation of the Insolvency Bill is expected to ease the work of insolvency practitioners, as well as affected insolvent estates. To date the draft Insolvency Act has been prepared and stakeholder consultative meetings conducted. The draft Insolvency Bill has been finalised and is pending gazetting.

 

 ENFORCING CONTRACTS:

Towards effective and speedy resolution of commercial disputes in Zimbabwe

Effective commercial dispute resolution has many benefits. Courts help entrepreneurs interpret the rules of the market and protect economic rights. Efficient and transparent courts encourage new business relationships as the private sector knows they can rely on the courts should clients fail to honour their obligations. Speedy trials are essential for small enterprises, which often lack the resources to stay in business while awaiting the outcome of a long court dispute.

 

The thematic working group is also working on a number of laws and regulations in order to reduce time and improve effectiveness in the resolution of commercial disputes. In this regard, a number of laws were developed. Acts will be ready by June 2016, however, while the enforcement of these laws is still pending, the thematic group is considering administrative measures which can be implemented to speed up resolution of commercial cases. These include the creation of a Commercial Court (Division of the High Court). Efforts in this regard are at an advanced stage.