BELIZE Law and Practice Contributed by: Tim Prudhoe, Nadia Chiesa and Lemelko Missick, Stanbrook Prudhoe
agreements, enabling repossession or control over unpaid goods provided they remain identifiable and separate. Creditors may exercise contractual or equitable set-off to offset mutual debts, consistent with Section 149 of the Act, which also governs statutory set-off in insol - vency. This allows trade creditors to reduce exposure before initiating formal recovery proceedings. 3. Out-of-Court Restructuring 3.1 Out-of-Court Restructuring Process The formal requirements for restructuring are set out in the Act. Section 15 (1) defines an arrangement as a compromise between a debtor and their creditors, with implementation overseen by a supervisor acting as a trustee or in another capacity. Under Section 20 (1), a company’s board may only make a proposal for an arrangement if the company is insolvent or is likely to become insolvent. In relation to the simplified debt restructuring pro - gramme, discussed at 1.2 Types of Insolvency , Sec - tion 285 (1) permits a company to apply to the official receiver for acceptance into the programme at any time, in accordance with the procedure prescribed in Schedule V. These provisions confirm that a formal written proposal, and in the case of the simplified pro - cess, an application to the official receiver, are man - datory procedural steps before any restructuring may commence under the Act. The Act does not require prior consensual nego - tiations before a formal statutory process begins. Instead, Section 15 (1) permits the debtor to directly propose a compromise, while Section 285 (1) allows a company to voluntarily apply for the simplified debt restructuring programme “at any time”. Once the pro - cess starts, the relationship between the debtor and creditors is defined through supervised negotiation. Section 292 (a)–(b) outlines the role of the restructur - ing advisor, who assists the company in formulating a proposed compromise and then help the company seek agreement from its creditors. According to Sec - tion 2 (1), the supervisor is the person responsible for supervising the implementation of an arrangement or
bankruptcy, acting as a trustee or otherwise. Thus, the restructuring advisor or supervisor acts as a crucial intermediary managing the negotiation process. A key feature of the statutory process is its binding nature once an arrangement is approved. Section 34 (1) stipulates that once sanctioned, the arrangement is binding on the company, its members and each credi - tor, treating them as if they were a party to the agree - ment. Similarly, in simplified restructuring, Section 293 (2) states that if the arrangement is approved by an order of the High Court, the compromise becomes binding on the company and the relevant creditors or class of creditors. Consequently, dissenting credi - tors are legally bound by the arrangement once it has received the necessary approval. Although the Act does not impose an explicit legal duty to co-operate during negotiations, it does pro - vide for sanctions against obstructive conduct and implies a requirement for good faith. Section 292 (c) authorises the restructuring advisor to help the company respond to any query from the High Court regarding the feasibility of the proposal, suggesting an underlying duty of good faith. Furthermore, Section 284 (6) offers protection to quali - fied persons, stating that they face no liability for any - thing done or omitted in good faith and with reason - able care while discharging their functions. According to Section 2 (1) of the Act, a qualified person means a person who has the qualification prescribed by regu - lations made under the Act to act as an insolvency practitioner, supervisor, trustee, liquidator or adminis - trator. This provision indicates that while co-operation is not explicitly mandated, stakeholders must act in good faith and can only be held liable if their non- cooperation amounts to bad faith or negligence. 3.2 Legal Status The Act sets out the legal framework for out-of-court restructuring in Part II – Creditors’ Arrangements, and Part XI – Simplified Restructuring of Debts. Section 15 (1) of the Act provides that “an arrange - ment is a compromise between a debtor and its or his creditors, the implementation of which is supervised by a supervisor acting as a trustee or otherwise”. This
70 CHAMBERS.COM
Powered by FlippingBook