Sick units bill sent back for review
According to sources, the Corporate Rehabilitation Bill 2010 was tabled during a meeting of the cabinet on Wednesday but a decision on the bill was postponed and instead formed a committee comprising three members and headed by the minister for finance to review the bill again. The bill was due to be presented to parliament after approval from the cabinet, said the source.
There are around 3,000 sick industrial units in the country right now and that number has increased in recent years due to the economic slowdown, said a source from the ministry of finance, adding that a mechanism needs to be developed for the treatment of such units and legislated through parliament.
The new bill includes clauses for the mergers, sale and closure of sick units while protecting the interests of prospective buyers, current lenders and owners of the units.
Sources indicated that although a recovery act and a law for dealing with liquidation exist in the country, there is no law for the rehabilitation of units close to bankruptcy. Now, four months later, the bill was sent to the cabinet again. Chapter 11 of the bill includes clauses for restructuring of near-bankrupt corporations by various means.
Mentioning that the bill had been rejected by the Senate during his term in office, Shaukat Tarin said that the bill will promote both domestic and international investment in the country.
He said that no mechanism exists currently for restructuring such units and banks usually take these corporations to court where the latter are declared bankrupt and dissolved. However, the bill will address the interests of all relevant stakeholders, he added.
Published in The Express Tribune, September 24th, 2010.
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