The Senate of Pakistan has passed the Corporate Rehabilitation Bill, 2017. The Minister for Law, Zahid Hamid, moved the Bill. Senator Saleem Mandviwalla also supported the Bill, saying that the Standing Committee had conducted extensive deliberations on it. He proposed certain amendments to it, which were accepted.
The existing institutional arrangements and legal process for revival and rehabilitation of distressed companies are both inadequate and time consuming. Efforts in the past have been made largely on said law, which resulted in imbalance of legal remedies for rehabilitation of debtors and protection of creditors. Therefore, a comprehensive legal framework is urgently needed to rehabilitate the distressed companies and businesses in the country.
The Bill is a part of extensive legislative plan being made for restructuring and rehabilitation of distressed and sick corporate entities with consensus of all relevant stakeholders. The first part of the legislation, which is titled as “Corporate Restructuring Companies Act, 2016” was enacted on July 1, 2016.
It provides mechanism for rehabilitation of the distressed companies, which is the need of the hour for sustainable growth of the corporate sector.
Its salient features include specification of High Court for rehabilitation of distressed companies, extensive plan of rehabilitation in relation to debtor, petition can be filed by qualified creditors and debtors for order of mediation and the appointment of insolvency experts to mediation through sole mediators or joint mediators appointed by the court.