Creditors get top priority in insolvency
BANDAR SERI BEGAWAN
CREDITORS get preferential payment when a company winds up under the new insolvency order, according to the Ministry of Finance (MoF).
Under the new order, creditors get higher priority than settling of government dues, the ministry said.
During an outreach session held yesterday on the new Insolvency Order 2016, Hjh Rena Azlina Dato Paduka Hj Abdul Aziz, deputy registrar at the Registry of Companies and Business Names, said before the Insolvency Order was issued last month, priority was given for payment of unsecured debts to dues from the municipal board. This was followed by income tax; wages of any clerk, servant, labourer or workman not exceeding $1,000; and deposit liabilities.
But under section 147 of the Insolvency Order 2016, priority is given to all unsecured debts with creditors being the first in line. This is followed by the cost and expenses of winding up of operations; wages and salaries of any employees; retrenchment/ ex gratia benefits; contributions payable; all remuneration payable; and finally all taxes that have been assessed.
The Insolvency Order 2016 came into effect this year, consolidating all insolvency provisions in the Companies Act into a stand-alone order. The order also included amendments to preferential payments, introduction of a new proceeding known as Company Voluntary Arrangement and introduction of insolvency practitioners.
Hjh Rena Azlina said the order aims to change the current insolvency culture, with more focus on company rescue and rehabilitation. It also aims to protect both creditors and debtors involved in the proceedings.
The MoF said in a statement that companies facing temporary shortfall and operational difficulties can enter a voluntary arrangement. This will allow the company to propose debt restructuring and/or corporate reorganisation with its creditors.
Yesterday’s outreach session was attended by representatives from Autoriti Monetari Brunei Darussalam, Brunei Investment Agency, Darussalam Assets Sdn Bhd, Ministry of Finance, Brunei Association of Banks, Brunei Darussalam Deposit Protection Corporation, Law Society of Brunei Darussalam and Chambers of Commerce in Brunei Darussalam.
More information regarding the Insolvency Order 2016 can be obtained through www.mof.gov.bn or at business.gov.bn. Printed copies of the Insolvency Order are available for sale at the government’s printing department or can be downloaded at www.agc.gov.bn and www.mof.gov.bn.
The Brunei Times