Insolvency Law at Cape Verde
Cape Verde's insolvency framework is governed by the Code for Bankruptcy and Recovery (CBR), enacted through Law No. 116/VIII/2016 on March 22, 2016. This legislation modernized the country's approach to insolvency by introducing both judicial and extrajudicial mechanisms for corporate recovery, aiming to preserve viable businesses and protect creditors' rights. (Insolvency Law Reform: The African Experience – Part I – ACLRH)
Key Features of Cape Verde's Insolvency Law:
Reorganization Procedures: The CBR facilitates the continuation of a debtor's business during insolvency proceedings, allowing for restructuring plans that can be negotiated and approved under court supervision. (Insolvency Law Reform: The African Experience – Part I – ACLRH)
Creditor Involvement: The law establishes a framework that enables active participation of creditors in insolvency proceedings, ensuring their interests are considered in the reorganization or liquidation processes. (2024 Investment Climate Statements: Cabo Verde - State Department)
Tax Incentives: Companies undergoing recovery or insolvency procedures may benefit from tax advantages, including exemptions or reductions in corporate income tax, personal income tax, stamp duty, and property tax. (Doing Business In.. Law and Practice in Cabo Verde)
Legal System Context:
Cape Verde's legal system is influenced by Portuguese civil law traditions. Prior to the enactment of the CBR, insolvency matters were regulated under the Civil Process Code of 1962. The 2016 reform aligned Cape Verde's insolvency laws more closely with international best practices, focusing on business rescue and efficient resolution of financial distress. (Insolvency Law Reform: The African Experience – Part I – ACLRH, Resolving Insolvency Reforms - Doing Business - World Bank Group)
International Commitments:
Cape Verde is a party to the Cape Town Convention, which affects insolvency proceedings, particularly concerning aircraft and other high-value mobile equipment. Under this convention, certain non-consensual rights, such as liens for unpaid wages or taxes, are given priority over registered international interests, even during insolvency. (D - Cape Verde ct - UNIDROIT)
Practical Considerations:
While the CBR provides a comprehensive legal framework, the regulation of insolvency practitioners in Cape Verde remains unclear. This lack of clarity may impact the consistency and efficiency of insolvency proceedings.
For businesses or individuals facing insolvency issues in Cape Verde, it is advisable to consult with legal professionals experienced in local insolvency law to navigate the complexities of the process effectively.
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