The National Competitiveness and Productivity Council (NCPC) continues to engage stakeholders on the soon-to-be-enacted Insolvency Bill, which has had its first reading in the House of Assembly. Insolvency is a financial state where an individual or organization is unable to meet its debt obligations, often leading to legal proceedings such as bankruptcy, where the debtor seeks relief from some or all debt obligations.
Sharma Mathurin, Deputy Director at the NCPC, states that this legislation complements other NCPC initiatives, such as the collateral registry and commercial court, aimed at creating greater economic relief and fostering economic growth. The public, she noted, can expect an increase in sensitization efforts on the Insolvency Bill to improve awareness and understanding of its benefits.
“This reform will have an impact on all users of the banking system, the credit unions, and the financial system. So, we want persons to understand what is in this new legislative framework. How it benefits them, how it protects them as consumers, how to take advantage of the economic opportunities presented to them as a result of the coming of this legislation and the establishment of the Office of the Supervisor or Receiver of Insolvency. In the coming weeks you will hear some public service announcements, a few advertisements putting out the information in layman’s terms so that the general populous, everybody can understand what this very technical piece of legislation is about.”
The legal fraternity has been a key stakeholder in the formation of this legislation. On May 16, 2024, over 30 legal practitioners from Saint Lucia participated in a virtual stakeholder engagement led by Bota McNamara, the Legal Consultant for the Insolvency Legislation. Among the various topics he elaborated on was the distinction between insolvency and bankruptcy.
“The term ‘insolvency’ is a broad umbrella for all things related to debt recovery, for lack of a better phrase. Receiverships, restructuring, and bankruptcy all fall under insolvency. The word ‘insolvency’ tends to cover that broad spectrum. It’s also thought that ‘insolvency’ is less aggressive to hear than ‘bankruptcy,’ which is why the move from the ‘Bankruptcy and Insolvency Act’ to the ‘Insolvency Act’ took place. The reality is that bankruptcy exists as a concept and is very much a final step in dealing with debt. If someone or an entity ends up in bankruptcy, it is the full stop. The control is fully taken away and moved forward. It’s not an unheard-of concept in Saint Lucian law. We already have a bankruptcy provision in our commercial court; it’s just under-utilized, if used at all. The concept of a third party being a trustee is already utilized in commercial situations involving liquidations and receiverships.”
McNamara noted that a key feature of the legislation, known as a proposal, offers immense benefits and protection to both debtors and creditors in restructuring debt obligations.
“The idea behind proposals, be it a proposal made by an individual or company or corporate entity, is to allow the debtor to engage in a conversation with all creditors. To allow a restructuring of their debts and allow either the individual or the company or corporation to proceed with what I often phrase as a going concern or an economic driver. That is to say, rather than them constantly throwing money after bad debt, the debts are restructured in a manner that allows the old debts to be paid off and resigned and allow the individual or company to now work more aggressively towards their future and thereby becoming a positive economic driver.”
The Insolvency Bill is available for public comment on the Government of Saint Lucia Portal and the Stluciancpc.org website. Through its sensitization campaign, the NCPC encourages all stakeholders to familiarize themselves with the provisions of the legislation and provide feedback to the NCPC for possible amendments before the second reading of the bill.