MAURITIUS Law and Practice Contributed by: Gilles Athaw, Jason Barbe, Deeviya Rughooputh and Sushika Ramlugun, Bowmans
7. Bankruptcy and Insolvency 7.1 Impact of Insolvency Processes
• third, payments made pari passu with first-ranking fixed and floating charges and mortgages inscribed for more than three years; • fourth, first-ranking fixed and floating charges and mortgages inscribed for less than three years; • fifth, other secured creditors; and • sixth, all other unsecured creditors who have been proved in the bankruptcy or winding-up. 7.3 Length of Insolvency Process and Recoveries The Insolvency Act 2009, which is the principal legis- lation dealing with the insolvency of companies, sets out the typical insolvency procedures in view of ena- bling the creditors to recover their debt, which are the receivership procedure and the liquidation procedure. Under the receivership, a receiver will be appointed by a secured creditor to take control and possession of the property in receivership (i) to protect the secured creditor’s position and (ii) to manage or realise the asset for repayment of the debt to the secured credi- tor. The Insolvency Act 2009 does not provide for any prescribed period of time for the completion of the receivership process. The length of the receivership procedure would generally take eight months to 16 months to complete, but it may take longer if the affairs of the company are more complex. Under the liquidation process, a liquidator will be appointed to take possession of, protect, realise and distribute the assets, or the proceeds derived from the realisation of the assets. Similarly for the receivership procedure, the Insolvency Act 2009 does not provide for any prescribed period of time for the completion of the liquidation process. The length of the liquidation process would generally take 12 months to 18 months to complete but may take longer if the transaction is more complex. 7.4 Rescue or Reorganisation Procedures Other Than Insolvency The Insolvency Act 2009 also sets out the formal mechanism for the rescue or reorganisation of a company, which is the voluntary administration of a company.
The facility agreement will generally treat an insol- vency event as an event of default and will usually include mechanisms where, upon the occurrence of such an event, the lender may have recourse to claim repayment of the loan and to enforce the security or guarantee which was provided to secure the loan. The lender may appoint a receiver to secure all the assets provided as collateral to avoid disposal by the grantor. In certain circumstances, a company may begin administration procedures under the Insolvency Act 2009. During the time that a company is in adminis- tration and upon the appointment of an administrator, a lender cannot enforce a charge on the property of the company except with the written consent of the administrator or with the permission of the court and on terms that the court thinks appropriate. This restriction, however, does not apply to a secured creditor; ie, a person who holds a charge on or over the property of the company and includes the holder of a “gage”. The secured creditor may apply to the court for an order granting leave to them to enforce their security within a specified period after the com- pany has been put into administration. The restriction does not further apply to those secured creditors who have already taken steps to enforce their rights to recover the property before the begin- ning of the administration of the company. 7.2 Waterfall of Payments The Insolvency Act 2009 sets out the order of priority in which creditors are paid on a company’s insolvency. The order of priority is as follows: • first, the liquidator or receiver for their fees and expenses and any indemnity to which they are enti- tled from the property of the company; • second, costs of compromises by the company with its creditors under the Companies Act;
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