15 July 2020
Three Months after the Insolvency Law 2020 Came into Effect in Myanmar
The Insolvency Law 2020 came into effect in Myanmar on 25 March 2020, and the accompanying Myanmar Insolvency Rules which deal with some practical aspects of the new law became effective on 28 April 2020. This new legislative framework combines corporate insolvency and personal bankruptcy under one legislation, introduces corporate rehabilitation and rescue as an alternative to liquidation for struggling businesses in Myanmar for the first time, and is also one of the pioneers in Southeast Asia to have a dedicated procedure for micro, small and medium-sized enterprises (MSME).
Three months have passed since the new law went into effect. With the economic fallout from Covid-19 intensifying around the world, ABLI has reached out to practitioners based in Myanmar for first-hand information on the actual operations of this law which is expected to play a big role during these uncertain times. Mr Mark Livingston, who is based in Yangon where he manages his own firm, Livingstons Legal, shared with us that the practical implementation of the new insolvency regime seems to be still pending. "We understand that a new Myanmar Insolvency Practitioners’ Regulatory Council, that will manage the licensing of insolvency practitioners under the new Law, has been formed and has held initial meetings. We further understand that the Council currently expects to announce a decision on a licensing process for insolvency practitioners before the end of July 2020. It is not yet known how long it will take for the initial insolvency practitioners to be licensed and be in a position to commence handling insolvency matters under the new Law, though the first batch of insolvency practitioners is expected to be drawn from Certified Practising Accountants in the country".
"Further, the Directorate of Investment and Company Administration, commonly referred to as DICA - which is Myanmar's company registry - has not yet introduced processes to allow it to also commence registry functions in relation to insolvency matters that are assigned to it under the new Law. In particular, DICA is currently still allowing the commencement of corporate windings up under the Myanmar Companies Law 2017, rather than under the new Insolvency Law," Mark added.
ABLI will continue to watch the development of the insolvency scene in Myanmar and how the new law can play its intended helpful role as more businesses, especially MSMEs, are expected to face tough times ahead with Covid-19 taking its toll.
To learn about the Myanmar Insolvency Law 2020 in detail, read the Myanmar chapter in Corporate Restructuring and Insolvency in Asia 2020 published by ABLI and the International Insolvency Institute here.