Insolvency Law at Botswana
In Botswana, Insolvency Law is governed primarily by the Insolvency Act (Cap 42:01). This legislation provides the legal framework for dealing with situations where individuals or companies are unable to meet their financial obligations to creditors.
Key Features of Insolvency Law in Botswana:
1. Types of Insolvency:
Personal Insolvency (Sequestration): Applies to individuals who are unable to pay their debts.
Corporate Insolvency: Applies to companies and includes procedures such as liquidation and judicial management.
2. Liquidation of Companies:
Initiated either voluntarily by resolution of shareholders or compulsorily by a court order.
Managed by a liquidator who collects and sells assets to pay creditors in a specific order of preference.
3. Judicial Management:
An alternative to liquidation aimed at rehabilitating financially troubled companies.
A judicial manager is appointed to manage the company and attempt to restore its viability.
4. Priority of Claims:
Creditors are paid according to a strict order, starting with secured creditors, then preferential creditors (like employees and tax authorities), followed by unsecured creditors.
5. Role of the Master of the High Court:
Supervises insolvency processes, including the appointment of liquidators and trustees.
6. Cross-Border Insolvency:
Botswana has limited legislation on cross-border insolvency but generally follows principles of comity and may cooperate with foreign insolvency proceedings in certain cases.
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