The Senate of Pakistan has passed the Corporate Rehabilitation
Bill, 2017. The Minister for Law, Zahid Hamid, moved the Bill. Senator Saleem
Mandviwalla also supported the Bill, saying that the Standing Committee had
conducted extensive deliberations on it. He proposed certain amendments to it,
which were accepted.
The existing institutional
arrangements and legal process for revival and rehabilitation of distressed
companies are both inadequate and time consuming. Efforts in the past have been
made largely on said law, which resulted in imbalance of legal remedies for
rehabilitation of debtors and protection of creditors. Therefore, a
comprehensive legal framework is urgently needed to rehabilitate the distressed
companies and businesses in the country.
The Bill is a part of extensive
legislative plan being made for restructuring and rehabilitation of distressed
and sick corporate entities with consensus of all relevant stakeholders. The
first part of the legislation, which is titled as “Corporate Restructuring
Companies Act, 2016” was enacted on July 1, 2016.
It provides mechanism for
rehabilitation of the distressed companies, which is the need of the hour for
sustainable growth of the corporate sector. Its salient features include
specification of High Court for rehabilitation of distressed companies,
extensive plan of rehabilitation in relation to debtor, petition can be filed
by qualified creditors and debtors for order of mediation and the appointment
of insolvency experts to mediation through sole mediators or joint mediators
appointed by the court.
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