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According to the statistics of the High Court master at the National Consultative Workshop on the Insolvency Bill held in Swakopmund, the number of insolvencies during this exercise is up to 39%. now two times lower than last year.
Last year, 32 bankruptcies were registered, including 12 companies and 15 close companies in liquidation and five people sequestered. The figures for this year (until 8 November) show that 17 bankruptcies have been registered so far, including six companies and seven close companies were liquidated and four people.
Bankruptcies have been ordered by a court, or have been voluntarily terminated by members or creditors. Figures include finalized or unfinalised insolvency proceedings.
In his opening remarks at the workshop, Justice Minister Sacky Shanghala said that the consequences of the existing legislative framework under the Insolvency Act are fatal, because when a person is declared insolvent, enjoying other rights becomes problematic.
For example, this person can only be a member of the National Assembly if it is rehabilitated, which could take up to 10 years.
"The status of insolvent not rehabilitated unduly prevents a person from fully enjoying his political rights. They can not either be a director of a company or be entrusted with the management of a company of a nearby company without the authority of the court, "he explained.
In addition, insolvency proceedings under the current legislation can last an average of two and a half years in Namibia, which is "too long", he said.
"We must stop thinking forever about killing businesses, careers and reputations, and move towards their rehabilitation more quickly, and help people get back on their feet so that the national economy is not paralyzed," he said. urged the minister.
The revision of the existing insolvency framework in the 1936 Insolvency Act will bring significant economic benefits to Namibia. Changing the law would improve costs and access to credit, and facilitate the conduct of business, especially with respect to foreign investment, Shanghala said.
"These advances will enable the economy to improve for the benefit of all Namibians," he told legal experts attending the four-day national consultative workshop.
The purpose of the workshop is to consult with stakeholders on the draft law in order to finalize the revision with a view to repealing the 1936 Insolvency Act which began in November. 2013.
Shanghala said the reform was crucial for the young Namibian economy in the process of reconstruction and development.
The workshop will refine the draft law prepared by the Law and Development Reform Commission to ensure that it is properly adapted to the Namibian environment and context and to raise public awareness of the bill and insolvency practice in Namibia.
The reform process also aims to align the law with Harambee's Prosperity Plan objectives by removing laws that hinder development.
"The result is to encourage business and investment opportunities in Namibia, which ultimately contribute to improving Namibia's GDP, and lift Namibians out of poverty inherited from Years of deliberate economic disaffection of the majority during the dark years of apartheid, "said Shanghala, adding that the current framework in insolvency is one of the obstacles to economic development .
He added that small businesses such as salespeople who manage to send their children to school and rent a house, sell fruits and vegetables, could dream of more important things, such as selling more, employing more and earn more money to eventually build a chain of stores the supermarket fruits and vegetables.
These dreams are however broken, because when the seller goes to a commercial bank to get a loan, they are refused because they do not have real estate as collateral for the loan.
They are also denied by the micro-lender, who fears that if the seller becomes insolvent, the possibility of repaying the loan would represent a third of a dollar and that the repayment process would take two and a half times. years.
In addition, Namfisa prohibits credit banks from keeping their ATM cards and their customers' PINs, thereby eliminating any guarantee on loans.
"The seller is frustrated with the impossibility of getting a loan for his business and continues to dream of the impossibility of expanding his business," Shanghala said.
He explained that this demonstrates the relevance of the law in promoting access to credit, which in turn stimulates economic activity and growth. It also shows that inadequate insolvency legislation can lead to higher credit prices and, at the same time, a decline in economic activity, as SMEs can not obtain credit at affordable interest rates.
Another critical aspect of the reform of the bill is the reality of foreign-owned or foreign-owned companies operating in Namibia. When one of them can not pay his debts, the current law limits the process of liquidation to property located in the country.
"In the absence of clear cross-border legislation, Namibia will have no jurisdiction over insolvency proceedings before foreign jurisdictions," he added.
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