The New Insolvency Regime
Traditionally, the issue of insolvency law reform has received little attention in Jamaica, despite clear recognition that the laws in Jamaica are outdated. Jamaica's insolvency laws are currently comprised in several distinct pieces of legislation dating back to the 19th century: the Bankruptcy Act, 1880 (dealing primarily with individuals) and the Companies Act 2004 (dealing with corporate insolvencies and receiverships) and the UK Winding Up Rules, 1948 (setting out much of the procedure). Although the Companies Act was updated in 2004 the provisions dealing with insolvency were left unchanged from the 1946 Act which it repealed. The view is often expressed that there are little or no votes in insolvency law and therefore the issue often ends up low in the list of priorities for the political directorate.
As times get hard, however, and discussions swirl regarding the bitter pill which Jamaica needs to face, the question of how does one deal with the question of insolvency in Jamaica begins to take on more significance. Insolvency is an issue which could touch anyone, whether big or small, corporate entities or individuals and is a critical area of concern for investors into the Jamaican market who want to know what the impact of insolvency will be on the recovery of their investment. The issue of insolvency law reform therefore is likely to be a focus of some attention in the coming months.
The guiding philosophy for the review of Jamaica's insolvency laws have been focused on "creating an environment which aids in the rehabilitation of debtors and the preservation of viable companies having due regard to the protection of the rights of creditors and other stakeholders and a fair allocation of the costs of the insolvencies with the overriding interest of strengthening and protecting the country's economic and financial system".
One of the major themes underpinning the recommendation for modern legislation for Jamaica therefore is that the new operating environment for insolvency must place primary emphasis on facilitating rescue and rehabilitation. In seeking therefore to extend beyond simply schemes of arrangement, recognized now under existing law but involving significant court involvement, has evolved the concept of "proposals". An insolvent person, or as recommended, a person facing looming insolvency (so as to ensure that persons do not have to wait until they actually fall off the cliff before seeking rescue), a receiver, liquidator, bankrupt or trustee of the estate of a bankrupt can seek to rehabilitate the insolvent person, looming insolvent or bankrupt by seeking to make a proposal for a composition, extension of time or scheme of arrangement with their creditors generally, either as a group or separated into classes or with secured creditors.