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Resolving Insolvency in

Mauritius

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 Mauritius to 189 other economies.

  • Indicator Explanation Answer
    Recovery rate (cents on the dollar) 67.4
    Proceeding BizBank has a floating charge on all assets of Mirage, in addition to the hotel itself as security for the loan. BizBank, in its capacity of chargee, can appoint a receiver if the charge document allows it to do so, or alternatively, make an application for the court to appoint a receiver over the assets of Mirage (Sections 185 and 186 of the Insolvency Act). Under section 204 of the Insolvency Act, BizBank, as secured creditor, will be reimbursed after payment of receiver's fees. The receiver has the power, as per section 190 of the Insolvency Act, to sell the hotel and reimburse Bizbank after reimbursing the receiver's fees (section 204 of the Insolvency Act). It is worth noting that liquidation is not in the interest of BizBank because it will take longer to recoup the amount due by Mirage. In addition, in liquidation, the provisions of the Fourth Schedule of the Insolvency Act would apply, whereby the creditors would be paid according to their rank. BizBank would be paid 5th. receivership
    Outcome According to the Eighth Schedule of the Insolvency Act (section 1), further to the recovery of the hotel by the receiver, the latter may sell the asset in order to reimburse Bizbank and the buyer will be able to continue operating the business. going concern
    Time (in years) According to our estimations, it takes 20 months to complete the receivership procedure in Port Louis. The main steps are as follows: (i) The receiver will communicate its appointment through the press 7 days after its appointment and inform the regulators; (ii) The directors are required to submit to the receiver the statement of accounts of Mirage 14 days after the notice by the receiver. Within 28 days after receipt of the above statement of accounts, the receiver will submit a copy of the statement of accounts to the Director of the Insolvency Service; (iii) The receiver prepares its first report 2 months after its appointment. Then, it will submit the report to the regulator; (iv) Within 2 months after his appointment, the receiver prepares his report on the state of affairs with respect to the property in receivership; (v) Every 6 months, the receiver will prepare a further report after the first report stating the revenues and payments as well as other steps undertaken during the period; (vi) The receiver will find a buyer and negotiate the sale. It must also agree with the buyer to take over the employees; (vii) The sale of the business as a going concern will take place; (viii) At the end of the receivership, the receiver shall notify in writing to the regulator and the Director of the Insolvency Service that the receivership has ceased, not later than 10 working days after the receivership ceases. 1.7
    Cost (% of estate) According to our estimations, the receivership procedure will cost 4,247,000 MUR (15% of the value of Mirage´s estate). Major expenses include: fees of lawyers (5%), fees of the receiver (5%), fees of auctioneers, accountants and other professionals (4%), and other costs – notification and publication costs, court fees – (1%). 14.5
    Answer Score
    Strength of insolvency framework index (0-16) 10.5
    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) 4.0
    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? (c) No priority is assigned to post-commencement creditors 0.0
    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) 3.0
    Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency representative? Yes 1.0
    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? 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