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Resolving Insolvency in

Brunei Darussalam

Below is a description of the time, cost and outcome of the most common insolvency proceeding in each economy under the case study assumptions, as well as the strengths and weaknesses in existing insolvency regulations in four areas: commencement of proceedings, management of debtor’s assets, reorganization proceedings and creditor participation.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 190 economies. The most recent round of data collection was completed in June 2016.

Compare Brunei Darussalam to 189 other economies.

  • Indicator Explanation Answer
    Recovery rate (cents on the dollar) 47.2
    Proceeding After Mirage's default, BizBank would enforce its security interest over Mirage's assets as the debenture holder and initiate foreclosure proceeding in the High Court foreclosure
    Outcome The hotel will stop operating and Mirage's assets will be sold piecemeal upon the completion of insolvency proceeding. Usually the assets will be sold through tender sale. piecemeal sale
    Time (in years) The foreclosure procedure takes approximate 2.5 years until BizBank is repaid some or all of the money owed to it. The delay is largely due to the possible delaying tactics adopted by Mirage. When the BizBank tries to foreclose the assets, it is likely that Mirage would file for an injunction at the Court. It takes at least 1 year for the Court to hold several hearings until the execution order is granted to BizBank. Then the preparation and execution of the assets sale would take at least an additional 1 year until BizBank receives the sales proceeds. 2.5
    Cost (% of estate) The costs associated with the case would amount to approximately 4% of the value of the debtor's estate; Main components of the costs incurred during the insolvency process include attorney fees (up to 2%), insolvency representative fees (1%), fees of accountants, assessors, inspectors and other professionals (1%). 3.5
    Answer Score
    Strength of insolvency framework index (0-16) 9.5
    Commencement of proceedings index (0-3) 3.0
    What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may file for both liquidation and reorganization 1.0
    Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (a) Yes, a creditor may file for both liquidation and reorganization 1.0
    What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) Debtor is generally unable to pay its debts as they mature 1.0
    Management of debtor's assets index (0-6) 5.0
    Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the debtor? No 0.0
    Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? Yes 1.0
    Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0
    Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0
    Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of insolvency proceedings? Yes 1.0
    Does the insolvency framework assign priority to post-commencement credit? (b) Yes over ordinary unsecured creditors but not over secured creditors 1.0
    Reorganization proceedings index (0-3) 1.5
    Which creditors vote on the proposed reorganization plan? (a) All creditors 0.5
    Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as what they would obtain in a liquidation? Yes 1.0
    Are the creditors devided into classes for the purposes of voting on the reorganization plan, does each class vote separately and are creditors in the same class treated equally? No 0.0
    Creditor participation index (0-4) 0.0
    Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency representative? No 0.0
    Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? No 0.0
    Does the insolvency framework provide that a creditor has the right to request information from the insolvency representative? No 0.0
    Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting creditors' claims? No 0.0