Insolvency Law at Djibouti
Djibouti's insolvency framework is primarily governed by its Commercial Code, which has undergone significant reforms to enhance the efficiency and accessibility of insolvency proceedings.
Key Features of Djibouti's Insolvency Law
Preventive Settlement Mechanism: Djibouti's Commercial Code allows an insolvent debtor to file for preventive settlement, enabling early intervention to address financial distress before it escalates into full-blown insolvency. This mechanism aims to facilitate the restructuring of debts and the continuation of business operations. (Business reforms in 吉布提 - Doing Business - World Bank Group)
Creditors' Participation: The law has been amended to make insolvency proceedings more accessible for creditors, granting them greater participation in the process. This includes the ability to challenge decisions and influence the outcome of proceedings, thereby enhancing transparency and fairness. (Doing Business 2019: Djibouti Jumps 55 Ranks - World Bank)
Bankruptcy Not Criminalized: Djibouti has established bankruptcy laws, and bankruptcy is not criminalized. This approach encourages entrepreneurs to take risks without the fear of punitive measures in case of business failure. (2024 Investment Climate Statements: Djibouti - State Department)
Resolution Time: The time to resolve insolvency in Djibouti was reported to be 1.50 years as of 2019, indicating a relatively efficient process compared to other economies. (Time to resolve insolvency (years) - Djibouti - IndexMundi)
Debt Collection Procedures: Djibouti law provides for judicial collection of debts through ordinary court procedures, simplified procedures for small disputes, and orders for payment. The limitation period for debt collection is generally three years, with specific provisions for commercial sales. (Debt Collection in Djibouti)
Legal Framework and Reforms
In March 2018, Djibouti enacted Law No. 001/AN/18/8ème L, amending the Commercial Code to strengthen its insolvency laws. This amendment broadened the range of movable assets that can be used as collateral, thereby enhancing the secured transactions system and facilitating access to credit. (Legislations - Arab Legislations Portal, [PDF] 91991 - World Bank Documents and Reports)
Practical Considerations
Duration of Bankruptcy Process: The bankruptcy process in Djibouti can vary in length depending on the complexity of the case, but it typically takes several months to a few years to complete. (The 10 best Bankruptcy Lawyers in Djibouti (2025) - Lawzana)
Legal Assistance: Engaging a lawyer experienced in Djibouti's bankruptcy laws can be crucial. They can provide guidance on the appropriate type of bankruptcy filing, assist in negotiations with creditors, and represent clients in court proceedings. (The 10 best Bankruptcy Lawyers in Djibouti (2025) - Lawzana)
For businesses or individuals facing insolvency issues in Djibouti, 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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