Insolvency Law at Comoros
The insolvency law in Comoros is governed by its Commercial Code and specific provisions that address both corporate and individual insolvency. However, Comoros does not have an extensive or highly developed insolvency framework like some other jurisdictions, and its legal provisions are generally more limited. Here’s a basic overview of the insolvency framework in Comoros:
🔹 Governing Legislation
Commercial Code of Comoros: Contains general provisions related to business operations, including insolvency.
Specific Insolvency Provisions: While Comoros does not have a detailed insolvency law like some countries, it does contain provisions in the Commercial Code that regulate bankruptcy and liquidation.
🔹 Corporate Insolvency Procedures
Judicial Liquidation (Redressement judiciaire)
This is the primary process for companies facing financial difficulties.
It is typically initiated when a company is unable to pay its debts as they fall due, and the court will oversee the liquidation.
Companies must be in a state of insolvency to trigger the liquidation process.
Voluntary Liquidation
A company may choose voluntary liquidation if it decides it can no longer operate, typically with the approval of shareholders.
Receivership
Not explicitly mentioned in Comoros law, but the country may adopt mechanisms based on similar laws or court decisions.
Rehabilitation (Reorganization)
The Commercial Code does not specifically detail any formal procedure for business rehabilitation, restructuring, or reorganization outside of liquidation.
🔹 Personal Insolvency
Comoros does not have a formal and detailed framework for individual bankruptcy or insolvency. Personal insolvency may be handled through the courts on a case-by-case basis, though there is no comprehensive insolvency process for individuals.
🔹 Insolvency Procedures Overview
Insolvency Declaration: A company facing insolvency must file a declaration with the court. The court will then assess the financial situation of the business.
Liquidation: If no solution can be found, liquidation is ordered by the court, and the company’s assets are sold to pay off creditors.
Asset Distribution: Creditors are prioritized based on their rank, with secured creditors usually paid first, followed by unsecured creditors.
🔹 Creditor Rights
Creditors can request the liquidation of a company, usually if the company is unable to meet its obligations.
In some cases, creditors may be able to participate in the liquidation proceedings and have their debts acknowledged by the court.
🔹 Cross-Border Insolvency
As of now, Comoros does not have specific provisions for cross-border insolvency, and its laws may not directly interact with international insolvency frameworks like the UNCITRAL Model Law.
🔹 Challenges & Limitations
Lack of a detailed restructuring framework: Unlike other countries, Comoros does not have a comprehensive mechanism for restructuring businesses outside of liquidation.
Limited judicial infrastructure: The legal system in Comoros may face practical challenges in fully implementing or enforcing insolvency procedures.
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