Govt moves to amend bankruptcy law to support struggling firms

ISLAMABAD:

Sub-committees on Bankruptcy Law and the Prevention of Undue Harassment by state authorities have recommended major reforms aimed at providing relief to companies facing winding-up orders.

The committees proposed significant amendments to the Corporate Rehabilitation Act, 2018. These include removing the eligibility threshold based on receivables and introducing a formal mechanism for stay orders through judicial directives.

They also recommended the inclusion of companies availing relief under State Bank of Pakistan (SBP) Circular No 29, along with suggesting the development of a comprehensive system for asset valuation and mediation.

Special Assistant to the Prime Minister (SAPM) on Industries and Production, Haroon Akhtar Khan, chaired a high-level meeting of the sub-committees. The meeting focused on reforms to the bankruptcy law and the prevention of undue harassment by state institutions.

The session was attended by Prime Minister's Coordinator Rana Ehsan Afzal and representatives from the Pakistan Business Council (PBC), Federal Board of Revenue (FBR), SBP, Securities and Exchange Commission of Pakistan (SECP), various chambers of commerce, the Anti-Money Laundering Authority, and other stakeholders. "This policy package will offer critical relief to affected companies," said Akhtar Khan. "The bankruptcy law will serve as a comprehensive and supportive legal framework to ensure industrial stability."

The committee also proposed amendments to the Corporate Restructuring Companies Act, 2016. They noted that the Corporate Rehabilitation Board has suffered delays due to overly stringent appointment criteria and a lack of funding.

The SAPM emphasised, "Banks and borrowers will now work together in a collaborative framework."

The sub-committee on undue institutional harassment submitted additional recommendations. These included developing a legal framework to protect the autonomous role and decisions of the SECP and promoting foreign investment through a non-political, interference-free environment. "Prime Minister Shehbaz Sharif's vision is clear: to revive sick industrial units and eliminate undue harassment from state authorities," said Akhtar Khan.

He also acknowledged the diligent efforts of the sub-committees and praised their commitment to creating business-friendly reforms.