Insolvency Law at Chad
In Chad, insolvency law is also governed by the OHADA (Organisation pour l'Harmonisation en Afrique du Droit des Affaires) legal framework, as Chad is a member state. The key legal instrument for insolvency is the Uniform Act Organizing Collective Proceedings for Wiping Off Debts, which outlines the procedures for dealing with insolvency in a way that is consistent across all OHADA member states.
Key Features of Insolvency Law in Chad (under OHADA):
Types of Insolvency Proceedings:
Preventive Settlement (Règlement Préventif): This is a preventive measure for businesses in financial difficulty but not yet insolvent. It allows the debtor to seek judicial protection and restructure before a crisis occurs.
Judicial Reorganization (Redressement Judiciaire): This process helps to restructure a financially distressed company in order to allow it to continue its operations, preserve jobs, and pay off creditors.
Judicial Liquidation (Liquidation Judiciaire): This is the final stage, where the company is dissolved, and its assets are liquidated to pay off creditors.
Initiation of Insolvency Proceedings:
The debtor, creditors, or public prosecutor may initiate insolvency proceedings.
A debtor must file for insolvency within 30 days of being unable to pay debts when due.
Court’s Role:
The court oversees the insolvency process, appointing an administrator or trustee to manage the proceedings.
The court also ensures that all legal steps are followed for the fair treatment of creditors and the debtor.
Suspension of Creditors’ Claims:
Upon the initiation of insolvency proceedings, individual creditor actions are suspended. This gives the debtor time to propose a recovery plan or reorganize their affairs.
Involvement of Creditors:
Creditors are involved in meetings to vote on whether to approve reorganization plans or the liquidation of the company.
Creditors may also have a say in how the company’s assets are liquidated.
Cross-Border Insolvency:
Chad, as part of OHADA, follows the framework for cross-border insolvency, though practical cooperation between member states is still in its development phase.
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