Insolvency Law at Bhutan
Insolvency law in Bhutan is governed primarily by the Insolvency Act of the Kingdom of Bhutan 2013, which was enacted to provide a structured legal framework for resolving insolvency issues for both individuals and companies.
Key Features of Bhutan’s Insolvency Law:
Governing Legislation:
Insolvency Act of the Kingdom of Bhutan 2013
Types of Insolvency:
Individual Insolvency (natural persons)
Corporate Insolvency (companies and legal entities)
Objectives of the Act:
To provide fair and orderly procedures for dealing with insolvent individuals and businesses.
To maximize the value of assets for creditors.
To allow for restructuring and rehabilitation where possible.
To ensure equitable treatment of creditors.
Types of Proceedings:
Liquidation – winding up of a company and distribution of its assets.
Reorganization/Restructuring – allows businesses to continue operating while reorganizing their debts.
Bankruptcy for individuals – declaring a person bankrupt and dealing with asset distribution.
Role of the Court:
The Royal Court of Justice plays a central role in initiating and supervising insolvency proceedings.
Insolvency Practitioners:
Licensed professionals are appointed to manage the insolvency process, including asset valuation, distribution, and reporting to the court.
Cross-Border Insolvency:
The Act includes provisions to handle cases involving foreign debtors or assets, in line with international standards.
Regulatory Bodies:
The Office of the Registrar of Companies (ORC) and Royal Monetary Authority (RMA) may have roles in certain insolvency cases, especially in financial institutions.
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