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Resolving Insolvency in

Chad

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 Chad to 189 other economies.

  • Indicator Explanation Answer
    Recovery rate (cents on the dollar) 0.0
    Proceeding Mirage cannot repay the money owed to BizBank, so the bank will start foreclosure proceedings at the Commercial Court. At the end of the procedure, the hotel building will be sold and BizBank will obtain payment. foreclosure
    Outcome According to our estimations, the hotel will stop operating and be dismantled, and the assets of the debtor will be sold separately. piecemeal sale
    Time (in years) According to our estimations, the foreclosure proceedings will take approximately 48 months. This estimate includes summoning Mirage, the foreclosure proceedings and the organization of the sale by the bailiff. 4.0
    Cost (% of estate) According to our estimations, foreclosure proceedings will cost approximately XAF 60,000,000 (60% of the value of Mirage). Please provide other estimates if you disagree. 60.0
    Answer Score
    Strength of insolvency framework index (0-16) 9.0
    Commencement of proceedings index (0-3) 2.0
    What procedures are available to a DEBTOR when commencing insolvency proceedings? (c) Debtor may file for reorganization only 0.5
    Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a creditor may file for liquidation only 0.5
    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) 5.5
    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? Yes 1.0
    Does the insolvency framework assign priority to post-commencement credit? (a) Yes over all pre-commencement creditors, secured or unsecured 0.5
    Reorganization proceedings index (0-3) 0.5
    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? No 0.0
    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) 1.0
    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? Yes 1.0