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Resolving Insolvency in

Cambodia

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 Cambodia to 189 other economies.

  • Indicator Explanation Answer
    Recovery rate (cents on the dollar) 13.9
    Proceeding BizBank would initiate foreclosing proceedings to avail itself of his security right by filing an application to the Court of First Instance. The Court invites the parties to negotiate, in the preparatory meeting. Because Mirage cannot repay, the court will rule in favor of BizBank. To enforce the judgment, a real estate company will assess the value of the property; then the sale will be announced. Other creditors, particularly the workers, may file claims. The sale will be organized and if no buyer is found, another auction will be needed. foreclosure
    Outcome The hotel will stop operating and Mirage assets will be sold piecemeal either through a public sale. piecemeal sale
    Time (in years) A foreclosure procedure will approximately take 6 years in total. This delay is largely due to judicial inefficiency. 6.0
    Cost (% of estate) The costs associated with the case would amount to approximately 18% of the value of the debtor's estate. Cost incurred during the entire insolvency process mainly include attorneys' fees (10%), court fees (1%), and enforcement fees (7%), which include fees of auctioneers, publication costs, the real estate evaluation. 18.0
    Answer Score
    Strength of insolvency framework index (0-16) 13.0
    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) 4.0
    Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the debtor? Yes 1.0
    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? No 0.0
    Does the insolvency framework assign priority to post-commencement credit? (c) No priority is assigned to post-commencement creditors 0.0
    Reorganization proceedings index (0-3) 3.0
    Which creditors vote on the proposed reorganization plan? (b) Only creditors whose rights are affected by the proposed plan 1.0
    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? Yes 1.0
    Creditor participation index (0-4) 3.0
    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? Yes 1.0
    Does the insolvency framework provide that a creditor has the right to request information from the insolvency representative? Yes 1.0
    Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting creditors' claims? Yes 1.0