Resource information
The assessment team interviewed a cross
section of country stakeholders regarding the effectiveness
of the legal infrastructure, and its implementation
supporting debtor-creditor relationships, corporate
insolvency and credit risk management, and resolution
practices, including among others, members of the
Inter-Agency Commission for the preparation of a new
insolvency law, and members of the drafting team for the new
collateral law; and, various professionals serving as
trustees, executors, lawyers and accountants also provided
their input. The conclusions in this assessment are based
largely on the above interviews, a review of applicable
legislation, data and information, various reports prepared
by the Bank between 1999-2001, and other reports or analyses
pertaining to the areas assessed, including the project on
the new collateral legislation, and registration system for
pledges (charges). Some laws unavailable in English at the
time were discussed in a number of meetings with
institutions, and professionals in the public, and private
sectors, and, translations have been requested for
follow-up. In addition, at least three commercial banks
provided responses to a questionnaire pertaining to credit
risk management, and corporate recovery practices with
respect to distressed assets. Policy recommendations on
Creditors' rights and enforcement procedures need
development as follows: rules or legislation on sufficiency
of security/transfer/ownership documents should be
promulgated to remove the discretion of the land registry,
and prevent delay of transactions due to refusals of
district land registry offices to register documents;
auction procedures should be refined to allow for more
realistic minimum bids, more transparent and
corruption-resistant procedures, and less court involvement;
debtor mechanisms for delaying enforcement of their
creditors' rights should be reduced, and in many cases
eliminated. Debtor's rights can be protected through
summary proceedings, in a different forum dedicated to
routine debt enforcement; and, enforcement of first, but not
final judgments should be allowed subject to posting of
appropriate bond. In addition; the Bankruptcy Law should be
further amended to include mandatory deadlines, with
time-bound procedures, to avoid the decimation of asset
value over time. The moratorium on creditor action should be
effective from the time of filing the petition, and the stay
on secured creditors counter-balanced by safeguards to
protect, and preserve the value of a separate
creditors' interest in collateral from deteriorating in
value. Creditors' committee meetings should be convened
within 30 days of petition filing, and creditors'
powers to supervise dealings of the trustee, should be better.
