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Thursday March 28, 2024

Corporate Rehabilitation Bill, 2018 passes Senate

By Our Correspondent
March 08, 2018

ISLAMABAD: Pakistan’s upper house has passed amended Corporate Rehabilitation Bill, 2018 that provides mechanism for rehabilitation of the distressed companies.

The bill is a part of extensive legislative plan for restructuring and rehabilitation of distressed and sick corporate entities of the country with consensus of all relevant stakeholders.

The first part of the legislation titled “Corporate Restructuring Companies Act, 2016” was enacted on July 1, 2016.

Sheikh Aftab Ahmad, the minister for parliamentary affairs, moved the bill on behalf of Rana Muhammad Afzal Khan, the state minister for finance and revenue.

The bill features specification of high court for rehabilitation of distressed companies, extensive plan of rehabilitation in relation to debtor. It also has provisions for qualified creditors and debtors to file petitions for order of mediation, appointment of insolvency experts to mediation through sole mediators or joint mediators appointed by the court. It also states the petitioners shall send notice of order of mediation to all interested parties.

Other features of the bill include appointment of administrator of the debtor and its responsibilities, plan of rehabilitation to be filed with the court, statement of affairs of debtor to be filed in court, confirmation and implementation of rehabilitation plan, and dismissal of the case by the court. Originally, the Senate passed it in September 2017. In January 2018, the National Assembly passed the bill after certain amendments. So it was reintroduced in the Senate on February 15, 2018 and, was referred to the standing committee on finance, revenue, economic affairs and narcotics control.

Senator Saleem Mandviwalla, the chairman of the Senate standing committee, approved the amendments made by the lower house, which resulted in the passage of the long-awaited law for the rehabilitation of distressed corporate entities.

The existing institutional arrangements and legal process for revival and rehabilitation of distressed companies are inadequate and time consuming.

Previously the bill had issues regarding legal remedies for rehabilitation of debtors and protection of creditors. Therefore, a comprehensive legal framework was urgently needed to rehabilitate the distressed companies and businesses in the country.