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Facilitating Informal Corporate Workouts Through ADR and other Flexible Business Rescue Tools: A Perspective from Uganda

Publication Type:

Journal Article

Source:

Makerere Law Journal, Volume 1, p.33-42 (2013)

URL:

http://www.geoffreykiryabwire.com/

Keywords:

bankruptcy law, Business rescue, Corporate workout, Global crisis, insolvency act 2011

Abstract:

<p style="text-align: justify;"><span style="font-size:14px;"><span style="font-family: lucida sans unicode,lucida grande,sans-serif;">BY HON. JUSTICE GEOFFREY <span data-scayt_word="KIRYABWIRE" data-scaytid="20">KIRYABWIRE</span></span></span></p><p style="text-align: justify;"><span style="font-size:14px;"><span style="font-family: lucida sans unicode,lucida grande,sans-serif;">The author is currently a Justice of Appeal in the Court of Appeal, Uganda. He was formerly the Head of the Commercial Court Division of the High Court of Uganda. He participated in the <span data-scayt_word="INSOL" data-scaytid="17">INSOL</span> ART in Cape Town South Africa 2011</span></span></p><p style="text-align: justify;"><span style="font-size:14px;"><span style="font-family: lucida sans unicode,lucida grande,sans-serif;"><strong>ABSTRACT</strong></span></span></p><p style="text-align: justify;"><span style="font-size:14px;"><span style="font-family: lucida sans unicode,lucida grande,sans-serif;">The global crisis that started in 2008/2009 has led to many corporations and companies failing and becoming insolvent. This situation has led to a spike in insolvency/bankruptcy proceedings against these failing corporations and ultimately leading to their liquidations. It is against this background and time in history that Uganda has enacted the new Insolvency Act 2011 to reform its insolvency and bankruptcy law. This paper seeks to establish whether corporate failure should automatically lead to the liquidation of the corporate entity without an attempt to rescue it first. Corporate rescue if successful can lead to the preservation of value which is critical to stabilizing not just the corporation but also to ensuring that other stakeholders and especially the creditors are able to recover as much money as possible. This will have an overall positive impact on the economy. This paper will look at various business rescue tools that have been used around the world and the experiences of the Ugandan Courts in this area. This paper will show that worldwide and in Uganda business rescue is possible through a variety of informal methods like work outs and alternative dispute resolution (<span data-scayt_word="ADR" data-scaytid="18">ADR</span>). The paper will also point to the need for Uganda as it reforms its insolvency law to include formal rules for corporate rescue that allow for the preservation of business value where this is possible.</span></span><br /><br /><br />&nbsp;</p>