The Asian Business Law Institute (ABLI) has been reaching out to practitioners in ASEAN for first-hand information on the insolvency response to Covid-19 in their respective jurisdictions, giving particular attention to places where access to updates in English is still limited.
We have previously published updates regarding Brunei and Myanmar.
In this write-up, we spoke to Mr Jay Cohen, a partner and director of Tilleke & Gibbins who is based in Phnom Penh. Jay is the author for the Cambodia chapter of Corporate Restructuring and Insolvency in Asia published by ABLI this April.
Jay has confirmed to us that Cambodia has so far not introduced any measure to target enforcement and execution of process, such as those to suspend or freeze existing processes or the ability to file process or obtain judgments. Nor has any measure been taken to restrict the ability to petition for a debtor’s insolvency, such as by raising the threshold for creditor filing or suspending or freezing the liabilities of a debtor’s directors to file for insolvency even when a statutory ground has been demonstrated. Likewise, directors remain liable for insolvent trading.
Like many other jurisdictions, the Cambodian government has announced a slew of measures targeting the general financing needs of businesses. They include, among others, a Central Bank directive on loan restructuring, a request for rental reduction for private educational institutions, broadened tax relief for tourism and aviation sectors, and an additional injection of USD 200 million into the Credit Guarantee Fund which guarantees lending by financial institutions to enable enterprises that may have previously faced difficulty accessing loans to obtain working capital. Tilleke & Gibbins has a Covid-19 Resource Centre where measures like these are explained in more detail in English.
“So far no Cambodian company has declared insolvency, thus policy focus does not seem to be on insolvency issues yet,” Jay added. “That said, I have received inquiries from companies seeking to close or seeking advice on matters that implicate insolvency-related issues. Therefore, we can certainly anticipate that companies are coming under stress and it would not surprise me to see at least some insolvencies in the future.”
Learn more about Cambodia’s insolvency regime here.