Insolvency Law at Palestine
Palestine is currently in the process of reforming its insolvency framework. The Palestinian Ministry of National Economy, in collaboration with the European Bank for Reconstruction and Development (EBRD), is developing a comprehensive insolvency law aimed at modernizing the legal and regulatory environment for both businesses and individuals in the West Bank and Gaza. This initiative seeks to enhance the competitiveness of the Palestinian economy and build upon the recently approved Companies Law. (EBRD and Palestinian Ministry of National Economy partner on insolvency law reform - EU Neighbours, EBRD working with the Palestinian Ministry of National Economy to develop insolvency legislation for the West Bank and Gaza)
Key Objectives of the New Insolvency Law
Early Support for Distressed Entities: The law aims to provide assistance to financially distressed but viable businesses at an earlier stage, facilitating rehabilitation and reducing the stigma associated with insolvency. (EBRD and Palestinian Ministry of National Economy partner on insolvency law reform - EU Neighbours)
Support for Individuals: It also seeks to help individuals struggling with debt management, offering mechanisms for debt restructuring and relief.
Alignment with International Standards: The reform is designed to align with international best practices, fostering a more stable and inclusive business environment. (EBRD working with the Palestinian Ministry of National Economy to develop insolvency legislation for the West Bank and Gaza)
Public Consultation: A public consultation event was held in Ramallah in November 2024 to present an outline of the key concepts of the new legislation and to collect public feedback. (EBRD and Palestinian Ministry of National Economy partner on insolvency law reform)
The draft insolvency law is expected to be submitted to the Palestinian Ministry of National Economy in the second quarter of 2025. Legal experts, including Andersen Palestine and EMA Global, are supporting the reform process. (EBRD and Palestinian Ministry of National Economy partner on insolvency law reform - EU Neighbours)
Current Legal Landscape
As of now, Palestine lacks a comprehensive insolvency law. The absence of such legislation has led to challenges in addressing financial distress among businesses and individuals, including a lack of formal mechanisms for debt restructuring and liquidation. The forthcoming insolvency law is expected to fill this gap, providing a structured legal framework for managing insolvency situations.
Broader Economic Context
The development of the insolvency law occurs within a broader context of economic challenges facing the Palestinian Authority. The World Bank has indicated that the Palestinian Authority is at risk of fiscal collapse due to dwindling revenue streams and declining economic activity. In response, the Israeli Security Cabinet has approved measures to prevent the collapse of the Palestinian Authority, including extending the period during which Israeli banks can maintain business relations with Palestinian banks. (Palestinian Authority risks fiscal collapse - L'Orient Today, Cabinet approves measures to prevent Palestinian Authority collapse - Israel News - The Jerusalem Post)
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