Insolvency Law at Mauritius
Mauritius's insolvency framework is governed by the Insolvency Act 2009, which consolidates laws related to the insolvency of individuals and companies. The Act offers structured procedures for debt resolution, including administration, receivership, and liquidation, and incorporates provisions for cross-border insolvency.
🏛️ Legal Framework
Insolvency Act 2009: The principal legislation governing insolvency matters in Mauritius.
Companies Act 2001: Complementary legislation that provides additional provisions related to company operations and restructuring.
Bankruptcy and Restructuring Act: Applies to individuals and provides mechanisms for debt restructuring.
⚖️ Insolvency Procedures
1. Administration
Objective: To rescue the company as a going concern or achieve a better return for creditors than in liquidation. (Mauritius Insolvency Law In 60 Seconds - Insolvency/Bankruptcy - Mauritius)
Initiation: Can be initiated by the company, a creditor with a qualifying charge, or a receiver. (Insolvency 2023 - Mauritius | Global Practice Guides | Chambers and Partners)
Process:
Appointment of a licensed insolvency practitioner as administrator.
Administrator takes control of the company's affairs.
A creditors' meeting is convened to decide on the company's future:
End the administration and return control to directors.
Wind up the company.
Approve a restructuring plan (Deed of Company Arrangement).
2. Receivership
Purpose: Allows secured creditors to enforce their charges over company assets. (Mauritius Insolvency Law In 60 Seconds - Insolvency/Bankruptcy - Mauritius, Insolvency 2023 - Mauritius | Global Practice Guides | Chambers and Partners)
Process:
A receiver is appointed, typically by a secured creditor.
The receiver manages and disposes of the company's assets to satisfy the secured debt.
Receivership is not a collective process and does not involve other creditors. (Insolvency 2023 - Mauritius | Global Practice Guides | Chambers and Partners, Mauritius Insolvency Law In 60 Seconds - Insolvency/Bankruptcy - Mauritius)
3. Liquidation
Types:
Voluntary Liquidation: Initiated by the company's shareholders.
Compulsory Liquidation: Ordered by the court, often upon petition by creditors.
Process:
Appointment of a licensed insolvency practitioner as liquidator.
Liquidator takes control of the company's affairs.
Assets are sold, and proceeds are distributed to creditors in a prescribed order of priority.
🔄 Restructuring and Rehabilitation
Compromise with Creditors: An out-of-court process where the company proposes a settlement to creditors.
Scheme of Arrangement: A court-approved arrangement between the company and its creditors to restructure debts.
Administration: As detailed above, can also serve as a restructuring tool. (The new Restructuring Framework from a Creditor's Perspective)
🌍 Cross-Border Insolvency
UNCITRAL Model Law: Mauritius has adopted the UNCITRAL Model Law on Cross-Border Insolvency, facilitating the recognition and assistance of foreign insolvency proceedings. (Insolvency 2023 - Mauritius | Global Practice Guides | Chambers and Partners)
Recognition Criteria:
The foreign proceeding must be under the control or supervision of a foreign court.
Application for recognition must be made by a person authorized to act on behalf of the foreign debtor.
The application must include necessary documentation, such as a certified copy of the foreign court's decision. (Insolvency 2023 - Mauritius | Global Practice Guides | Chambers and Partners)
⚠️ Recent Developments
Amendments to the Insolvency Act 2009: In response to the COVID-19 pandemic, several amendments were made to provide relief to businesses, including increasing the debt threshold for bankruptcy notices from MUR 50,000 to MUR 100,000. (Dentons - The COVID-19 (Miscellaneous Provisions) Act of 2020 introduced by the Parliament of Mauritius - Amendments and their implications)
Proposed Changes to the Companies Act 2001: The 2024 Budget proposed amendments to require administrators of limited life companies to comply with the provisions of the Insolvency Act 2009, ensuring standardized procedures and accountability. (Mauritius: Administrators appointed to wind up limited life companies to now abide by the provisions of the Insolvency Act | Bowmans)
📌 Conclusion
Mauritius's insolvency framework provides a structured approach to debt resolution, balancing the interests of creditors and debtors. Recent developments indicate a move towards enhancing the efficiency and fairness of insolvency proceedings.
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