Insolvency and corporate rescue seminar 2019
Strathmore Law School in conjunction with Citadel Law Africa, Ashitiva Advocates and K&O Associates held the Insolvency and Corporate Rescue Seminar 2019 at the Microsoft Auditorium, Sir Thomas More Building on 30th July 2019. The seminar brought together experts and high-level professionals from banking, business, professional, legal fields and regulatory bodies to discuss and share insights on corporate restructuring and insolvency options and trends in Kenya.
The topics covered ranged from: an overview of the different insolvency procedures and their effects; debt restructuring options; regulatory oversight in corporate restructuring and insolvency process; key issues arising from restructuring through the insolvency process; remuneration of director shareholders and the dangers of unlawful dividends and personal guarantees which included a discussion of a case law.
The seminar touched on volatile market conditions experienced by key sectors of the economy that have increased the risk of business loss and loan delinquency among large corporates and Small Medium-Sized Enterprise (SMEs). With the introduction of The Insolvency Act in 2015, distressed corporates and SMEs can now access court-mediated financial restructuring to stay solvent and avoid business collapse from non-payment of debts. Most organizations, however, opt for out of court workouts with creditors for ease of settlement. Nevertheless, the process more often than not is cumbersome and takes months before an agreement can be reached between all parties.
On the other side, banks in the company face the ramifications of high Non-Performing Loans NPL ratio with the country’s average exceeding 10.2% in 2018. IFRS 9 is the International Accounting Standards Board’s (IASB) response to the financial crisis, aimed at improving the accounting and reporting of financial assets and liabilities. It was launched worldwide on 1st January 2018 marking a challenging period for banks as they work towards setting aside provisions for expected loan loss and operate with lesser capital. Banks, therefore, are under increased pressures to ensure the successful implementation of the regulation, and in turn, effectively manage the NPL ratio.
The program also hosted discussions on the need to further reform insolvency law and corporate rescue practices.
This article was written by Tuzo Jonathan.
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