RWANDA Law and Practice Contributed by: Jean Pierre Kesteloot and Penina Ngabire, Liedekerke Great Lakes
Insolvency proceedings will usually be followed by either: • judicial reorganisation proceedings, when there is a reasonable prospect for rescuing the company and it is clear that the company will likely meet its future financial obligations as they become due and payable; or • judicial liquidation proceedings when it is clear that the company is unable to pay its debts. It is also possible to immediately file for judicial reor - ganisation or judicial liquidation. 2.9.3 Co-Ordination, Recognition or Relief in Connection With Overseas Proceedings Cross-Border Insolvency Regime The Rwanda Insolvency Act establishes a cross-bor - der insolvency regime, which applies notably when: • assistance is sought in Rwanda in connection with a foreign proceeding; • foreign and domestic proceedings in respect of the same debtor are taking place concurrently; or • where foreign creditors have interest in initiating, or participating in, insolvency proceedings in Rwanda. In these circumstances, a foreign authority, represent - ative or creditor may apply to initiate, or to participate in, insolvency proceedings in Rwanda. Co-Ordination Principles The Rwanda Insolvency Act states that co-operation “may be implemented by any appropriate means”, and therefore does not prevent the parties from adopt - ing certain co-ordination principles such as the Ameri - can Law Institute and International Insolvency Institute Guidelines Applicable to Court-to-Court Communi - cations in Cross-Border Cases 2001, and the INSOL International (International Association of Restructur - ing, Insolvency and Bankruptcy Professionals). Recognition of Foreign Proceedings A foreign representative may apply to the competent court in Rwanda for recognition of a foreign proceed - ing in which it has been appointed. In doing so, the foreign representative must provide the competent court with the required documentation, including a
certified copy of the decision commencing foreign proceedings and appointing the foreign representa - tive. Once an application for recognition of the foreign pro - ceedings is made, it will cause an automatic stay over the debtor’s property. 2.9.4 Effect of Lessee’s Insolvency on a Deregistration Power of Attorney Assuming that a lessee has granted a deregistration power of attorney or an irrevocable deregistration and export request authorisation (IDERA) to a lessor, own - er or mortgagee of an aircraft, the power of attorney should not be void or terminated as a consequence of the liquidation of the lessee. 2.9.5 Other Effects of a Lessee’s Insolvency Assuming that a lessee has possession of the aircraft and is put into liquidation or administration or similar process, the following applies. • The liquidator may decide to terminate the lease agreement. • The lessor will not be prevented or delayed from repossessing the aircraft, in accordance with the relevant provisions of the Cape Town Convention, which Rwanda has ratified. • The aircraft will not be deemed to be part of the lessee’s property. • The liquidator will not impose the rights of other creditors in priority to those of the lessor. However, it is important that the lessor diligently requests the return of the aircraft. 2.9.6 Risks for a Lender if a Borrower, Guarantor or Security Provider Becomes Insolvent The main risks for a lender would be the inability to obtain payment from the borrower if the borrower becomes insolvent. 2.9.7 Imposition of Moratoria in Connection With Insolvency Proceedings Moratorium/Stay As a rule, the rights of secured creditors are not stayed by the commencement of insolvency proceedings. However, where the debtor shows the intention to submit a reorganisation plan along with the applica -
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