BELIZE Law and Practice Contributed by: Tim Prudhoe, Nadia Chiesa and Lemelko Missick, Stanbrook Prudhoe
4.2 Statutory Restructuring, Rehabilitation and Reorganisation Procedure There are two principal restructuring mechanisms: the creditors’ arrangement (Part II) and the simplified debt restructuring programme (Part XI). Both allow finan - cially distressed debtors to compromise with creditors under court supervision while maintaining business continuity. Restructuring may affect the rights of members, secured and unsecured creditors, and contractual counterparties. Under Section 15, an arrangement may cancel, reduce or vary debts or contractual obli - gations. Secured and preferential creditors are only bound with their written consent. The Act does not expressly provide for third-party releases. Guarantors, directors and group companies may only be released with creditor consent or court approval in exceptional circumstances. Creditors are grouped into classes (secured, preferen - tial, and unsecured) under Section 293 (4). Approval requires a two-thirds majority in value of each class. Related-party votes are excluded unless permitted by the court. Creditor claims are verified through disclosures filed with the restructuring proposal, and the High Court may assess or adjust claim values to ensure fairness (Section 293 (5)). Upon acceptance into the simplified debt restructuring programme, a statutory moratorium applies (Section 291), preventing liquidation, enforcement or execu - tion without leave of the court. A restructuring advisor appointed by the official receiver (Section 284) assists the debtor in preparing and negotiating the plan. Once approved by the required majority and sanc - tioned by the High Court, the arrangement binds all creditors within that class, including dissenters (Sec - tion 293 (2)). This mechanism operates as a limited cross-class cram-down. The High Court may authorise new financing or secu - rity during restructuring where necessary to preserve
Concerning an individual creditor’s arrangement, a debtor who intends to make a proposal for an arrange - ment with his or her creditors “shall nominate an eligi - ble insolvency practitioner to act as interim supervisor for the purpose of the proposal” (Section 47 (1)(a)). Under the Act, an insolvent individual can choose to initiate an out-of-court restructuring, as there is no mandatory filing requirement. As it relates to the formal and material criteria for initi - ating the procedure, Section 20 (1)(a) requires that the company “believes on reasonable grounds that the company is insolvent or is likely to become insolvent”. For companies, the process begins with a board resolution, as required under Section 20 (1)(b), with such resolution stating its belief that the company is insolvent or is likely to become insolvent. The reso - lution should approve a written proposal containing the information prescribed, and it should nominate an eligible insolvency practitioner to be appointed as interim supervisor (Section 20 (1)(b)). Where the board of the company has passed a resolu - tion, it is required to provide the nominated insolvency practitioner with the following: • a copy of the resolution passed; • a copy of the proposal approved by the board; • a statement of affairs made up to a date no earlier than two weeks prior to the date of the resolution; and • a notice of intention to appoint the nominated insolvency practitioner as interim supervisor. Eligible debtors may be subject to the procedure for creditors’ arrangement. Section 14 (1) defines a debt - or as “a company or individual proposing an arrange - ment”. However, Section 19 (2) of the Act provides an explic - it limitation, which applies to foreign companies. A foreign company may not propose or enter into an arrangement.
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