ROYAL
GOVERNMENT OF CAMBODIA
Ministry
of Commerce
June 2001
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ROYAL
GOVERNMENT OF CAMBODIA Ministry
of Commerce |
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June 2001 |
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Table of Contents Article
2.
Definition of Terms Article 3. Court of Jurisdiction
CHAPTER
2
Article
4.
Subjects of Insolvency Proceedings Article
5.
Grounds for the Opening of Insolvency Proceedings Article
6.
Petition to Open Insolvency Proceedings Article
7.
Duty to Petition for the Opening of Insolvency Proceedings Article
8.
[Service of Petition] Article
9.
Appointment of Provisional Administrator to Protect the Estate Article
10.
Stay of all other Proceedings Upon Petition CHAPTER
3 Article
11.
Hearing of the Petition Article
12.
Ruling on the Petition Article
13.
Commencement of Liquidation by the Court Article
14.
Date of Opening of Insolvency Proceedings Article
15.
[No Opening of Insolvency Proceedings for Lack of Assets] Article
16.
Costs for a Dismissed Petition Article
17.
Publication and Notification of the Opening of Insolvency Proceedings EFFECTS
OF THE OPENING OF INSOLVENCY PROCEEDINGS Article
19.
Supervision of the Debtor and its Activities Article
20.
[Treatment of Joint Marital Property] Article
21.
Valuation of Encumbered Asset Article
22.
Protection for Secured Creditors Article
23.
Maintenance Payments from the Estate Article
24.
Duty of Debtor to Provide Information
Part
B – Safeguarding and Enhancement of the Estate Article
25.
Treatment of Contracts Article
26.
Avoidance of Certain Prejudicial Transactions Article
27.
Presumption of Required Knowledge Article
28.
Avoidance of Payment for a Due Claim Article
29.
Application to Avoid Transactions Article
30.
Effects of an Avoided Transaction
Part
C – Determination of Claims Article
33.
Conversion of Claims Article
34.
Filing of Proofs of Claims Article
35.
Preparation of the Claims List Article
36.
Proposal for a Plan of Compromise Article
37.
Contents of a Plan of Compromise Article
38.
Costs for the Preparation and Proposal of a Plan of Compromise Part
B – Approval of a Plan of Compromise Article
39.
Approval by Creditors Article
40.
Approval by the Court Article
41.
Effect of Court Approval of a Plan of Compromise Article
42.
Implementation of the Plan of Compromise Article
43.
Failure to Implement a Plan of Compromise – Resumption of Insolvency
Proceedings
(a) This law establishes the conditions and procedures governing the insolvency of debtors. [Ukraine] (b) Insolvency proceedings shall provide collective, orderly and fair satisfaction of creditors’ claims out of a debtor’s estate and, where the parties in interest agree it is appropriate, the rehabilitation of the business of the debtor. [Modeled after Germany’s S.1] Article 2.Definition of Terms (a) “Creditor” means any natural or legal person who owns an admissible claim against the debtor which arose before the opening of the insolvency proceedings, regardless of whether such claim is conditional, unliquidated or contingent. (b) “Company” means a limited company formed under the Law of Commercial Enterprises. (c) “Costs of the proceedings” and “costs of the resumed proceedings” mean all costs related to the administration of the insolvency proceedings, including the [court’s costs and the] remuneration, fees and expenses of the administrator. (d) “Court” means a court which, under the laws of the Kingdom of Cambodia, has jurisdiction over insolvency proceedings opened under this law. (e) “Debtor” means any natural or legal person who is engaged in a business enterprise and who may be made a subject of insolvency proceedings under this law. [UNCITRAL legislative guide, page 3.] (f) “Partnership” means a general or limited partnership formed under the Law of Commercial Enterprises. (g) “Related person” means:
(i) in the case of a debtor which is not a natural person, any shareholder, director, partner or manager of the debtor; the debtor’s spouse or, in the case of a debtor which is not a natural person, the spouse of any shareholder, director, partner or manager of the debtor; (i) any ascendant or descendant of the debtor or of any person described in paragraphs (i) and (ii) ; (ii) the spouse of any person described in paragraph (iii) ; (iii) any sibling, or the spouse of any sibling, of the debtor or of any person described in paragraphs (i) , (ii) , (iii) or (iv) ; (iv) any company in which a person described in paragraphs (i) , (ii) , (iii) , (iv) or (v) holds more than five percent of the shares, or is a director or a manager; (v) any partnership in which a person described in paragraphs (i) , (ii) , (iii) , (iv) or (v) is a partner or a manager; (vi) any legal person formed under the laws of a foreign country in which a person described in paragraphs (i) , (ii) , (iii) , (iv) or (v) holds more than five percent of the capital, or is a director, a manager or a partner; (vii) in the case of a debtor who is a natural person, any person living in the debtor’s household; (viii) any natural or legal person who, by reason of its professional or commercial relationship with the debtor, has access to non-public information about the financial or commercial affairs of the debtor; or (ix) any creditor whose claim against the debtor exceeds ten percent of the total value of all creditors’ claims against the debtor. [Germany, S.138; Thailand, S.6; Bulgaria, Supplementary provisions] Article 3. Court of Jurisdiction [Notes: - Which courts will have jurisdiction? - What will be the appeals process throughout the law? Answers to the above questions will have to be harmonized with the law(s) on court organization.] OPENING OF INSOLVENCY PROCEEDINGS – SUBJECTS, GROUNDS AND PETITION
Article 4.Subjects of Insolvency Proceedings (i) a partnership or company; (ii) a natural person who is domiciled in the Kingdom of Cambodia with respect to debt which arises from a business or trade engaged in by such person; (iii) a legal person or partnership formed under the laws of a foreign country which owns property situated in the Kingdom of Cambodia; and (iv) a natural person who is domiciled outside the Kingdom of Cambodia and who owns property situated in the Kingdom of Cambodia. (b) Insolvency proceedings shall not be opened under this law against any debtor which is a covered entity under the Law on Banking and Financial Institutions. (c) Insolvency proceedings opened under this law against the persons set out in paragraphs (a) (iii) and (a) (iv) shall apply only to the assets of such persons which are situated in the Kingdom of Cambodia. The following shall be considered assets situated in the Kingdom of Cambodia: (i) tangible assets located within the territory of the Kingdom of Cambodia; (ii) property and rights for which the ownership of or entitlement to must be entered in a public register under the authority of the Royal Government of Cambodia; and (iii) claims against any entity which has the center of its main interests in the Kingdom of Cambodia. In the absence of proof to the contrary, any company or partnership shall be presumed to have the center of its main interests in the Kingdom of Cambodia. [EU Council regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings, Article 2(g)] [Note: This Article is drafted in line with the recommendation to limit the current application of the law to: (a) business entities; and (b) for foreign entities, only assets located in the Kingdom of Cambodia. Under the Law on Commercial Enterprises, all partners have joint and several liability for all partnership debts. It is recommended that partnerships be included in this law, to provide for orderly partnership insolvencies through one “central” insolvency proceeding against the partnership, instead of separate proceedings against each partner. The relevant parts of the Law on Commercial Enterprises dealing with dissolution and liquidation of partnerships and companies may need to be changed to incorporate the provisions of this law. Banks and financial institutions have been specifically excluded for the time being because the treatment of these institutions in insolvency requires the consideration of very complex policy questions (e.g., treatment of depositors, use of government money for bank rescues, etc.). Such policy questions will require the input of, among others, the Central Bank and the Ministry of Finance.] Article 5. Grounds for the Opening of Insolvency Proceedings (a) In the case of a petition by the debtor, a creditor or creditors, the failure of a debtor to meet one or more valid obligations to pay an aggregate amount in excess of [Riels 5,000,000 – about US$1,300] shall be a ground for the opening of insolvency proceedings with respect to the debtor. The Minister of Commerce may, by regulation, change the minimum amount of obligation required for the opening of insolvency proceedings set out in the first sentence of this paragraph. [Note on (a): Adjustment of the minimum amount by ministerial regulation is indispensable. We understand that the Cambodian Constitution has an instrument akin to the French Decret-Loi? If Cambodia has a minimum wage, a multiple thereof may also be used as the minimum amount.] (b) In the case of a petition by the debtor, a determination by the debtor that it is likely to be unable to meet its existing obligations to pay on the respective maturity dates of those obligations shall also be a ground for the opening of insolvency proceedings with respect to the debtor. [This paragraph (b) is modeled after Germany’s S.18] Article 6. Petition to Open Insolvency Proceedings (a) A petition to open insolvency proceedings may be filed by a debtor, one or more creditors or the [Minister of Commerce/Director of Companies/public prosecutor]. (b) A petition to open insolvency proceedings shall be made in writing and shall be signed by the petitioner. The petition shall contain the following information: (i) the name and address of the debtor; (ii) the name and address of the petitioner, if it is not the debtor; (i) the ground or grounds under Article 5 on which the petition is based; (ii) a description of the circumstances showing the existence of the ground or grounds for the petition; (iii) evidence on which the petition is based, including an attachment of any documents which could substantiate the petition; and (iv) in the case of a petition by the debtor, a list of all known creditors of the debtor, indicating the names of the creditors, their addresses and the amounts of their respective claims. [Note: In the context of Cambodia, it is probably useful to give public authorities a right to petition for the opening of insolvency proceedings, to serve as a “check” on improper business behavior.] Article 7. Duty to Petition for the Opening of Insolvency Proceedings (a) A debtor that has ceased to meet any of its mature obligations to pay shall, within [thirty] days of such cessation, petition for the opening of insolvency proceedings against itself, if the aggregate of such mature obligations exceeds the amount stipulated under Article 5 (a) . (b) In the case of a debtor who is a natural person, it shall be his duty to ensure that a petition is filed pursuant to paragraph (a) . In the case of a debtor which is a partnership or a company, it shall be the duty of every individual director, partner or manager, as the case may be, to ensure that a petition is filed pursuant to paragraph (a) . (c) Any person who fails to observe the duty under paragraph (b) shall be personally liable to the debtor’s creditor or creditors for damages that result directly from such failure. If the duty under paragraph (b) falls on more than one person, all such persons shall be jointly and severally liable for damages that result from the failure to observe the duty. Should insolvency proceedings be commenced against the debtor, such damages shall be included in the estate and the administrator shall act on behalf of all creditors in their recovery. [Note: This article is modeled after Bulgaria’s A.626 and 627] Article 8. [Service of Petition] A creditor’s petition, [or a petition by the Minister of Commerce/Director of Companies/public prosecutor], shall be served by the petitioner on the debtor no later than seven days after the petition has been filed with the court. The court may, upon the (a) application of the petitioner, extend the period for the service of the petition, but for not more than seven days. (b) The court shall be notified of the service of the petition immediately after such service has been effected.] [Note: In many civil law systems, it is not for the plaintiff/petitioner to serve process but for the court to do so. This article may therefore not be needed. In any event, if retained, the article will need to be harmonized with the rules on civil procedure in Cambodia. We will require the input of the Ministry of Justice and other related officials in Cambodia on this issue.] Article 9. Appointment of Provisional Administrator to Protect the Estate (a) From the time of the filing of a petition to the court’s issuance of its order whether to open insolvency proceedings, the court shall, upon the written application of the debtor, any creditor[ or the Minister of Commerce/Director of Companies/public prosecutor], issue an order to appoint a provisional administrator. (b) The provisions of Chapter 10, Part A shall apply, mutatis mutandis, to a provisional administrator. (c) An order of court made under paragraph (a) shall be published, including [in the Official Gazette of the Kingdom of Cambodia]. [Modeled after Germany, S.21 and S.23; Bulgaria, A. 629a] [Note: The automatic appointment of an interim administrator upon application to the court will help to ensure that:
Article 10. Stay of all other Proceedings Upon Petition (a) Upon the filing of a petition to open insolvency proceedings, and until the termination of the proceedings, no action, proceedings or execution process of any kind shall be commenced or continued against the debtor or assets of the estate, except: (i) by the administrator or provisional administrator; or (i) with the permission of the court. (a) In the case of a petition filed against a debtor which is a general partnership or a limited partnership, the stay of action in paragraph (a) shall also apply to any action, proceedings or execution process against a partner or general partner of the debtor, respectively, and to the partner’s assets. Only the administrator or provisional administrator may claim a partner’s personal liability for the debtor’s debts during such insolvency proceedings. [Modeled after Germany, S. 93] (b) The stay of action under paragraph (a) shall not apply to claims pertaining to the remuneration, fees and expenses of the administrator and other claims incurred by the administrator in course of the insolvency proceedings. DECISION ON THE PETITION TO OPEN INSOLVENCY PROCEEDINGS Article 11. Hearing of the Petition (a) A debtor’s petition shall be heard by the court as soon as possible after it is filed and in any event no later than [seven days] after the petition is filed. (b) A creditor’s petition [or a petition by the Minister of Commerce/Director of Companies/public prosecutor] shall be heard by the court no later than fourteen days after the petition has been served on the debtor. (c) The debtor, any creditor [and the Minister of Commerce/Director of Companies/public prosecutor] shall be entitled to participate in the hearing. Article 12. Ruling on the Petition (a) If the court is satisfied, after the hearing of the petition, of the existence of the ground or grounds on which the petition is based, the court shall issue a written order: (i) pening insolvency proceedings against the debtor; (ii) appointing an administrator, who could be the provisional administrator appointed under Article 9 ; (i) announcing a date for the opening creditors’ meeting, which shall be on a day no earlier than [thirty] but no later than [sixty] days after the opening of the insolvency proceedings; and (ii) the deadline for the filing of proofs of claims, which shall be seven days before the date of the opening creditors’ meeting. [Note: (a)(i) and (a)(ii) are modeled after Bulgaria’s A. 630.] (b) In determining the date of the opening creditors’ meeting under paragraph (a)(iii) , the court shall take into account whether the debtor has submitted a proposed plan of compromise which the debtor represents has the support of creditors required for the approval of a plan of compromise under Article 39 . (c) If the court is satisfied, after the hearing of the petition, that the ground or grounds on which the petition is based do not exist, the court shall issue a written order dismissing the petition. (d) The court’s order to open insolvency proceedings or to dismiss the petition shall be issued no later than fourteen days after the hearing of the petition. (e) The debtor or any creditor may appeal the court’s order made under this article within seven days after the issuance of the order. An appeal shall not operate as a stay on the execution of the court’s order made under this article. [Note: The appeals process needs to be discussed further, especially with reference to the civil procedure rules of Cambodia.] Article 13. Commencement of Liquidation by the Court (a) The court may, when it issues the order to open insolvency proceedings, or at any time thereafter, order that the liquidation of the debtor’s business be commenced forthwith on the ground that the rehabilitation of the debtor’s business is not feasible. (b) The court may make an order under paragraph (a) either on its own motion or upon the application of the debtor, the provisional administrator, the administrator or any creditor. Article 14. Date of Opening of Insolvency Proceedings The insolvency proceedings shall be considered opened on the date of the court order opening the insolvency proceedings. Article 15.[No Opening of Insolvency Proceedings for Lack of Assets] (a) Insolvency proceedings shall not be opened and the petition shall be dismissed if the debtor’s assets will likely be insufficient to cover the costs of the proceedings, unless a sufficient amount of money is advanced to cover such costs. [Germany, S. 26(1)] (b) Anyone advancing an amount of money under paragraph (a) may, within [five years] from the time the amount is advanced, claim reimbursement of the advanced amount from any person who, in contravention of this or other law, failed to discharge his duty to petition for the opening of insolvency proceedings against the debtor at the time the petition was filed. In the event of a dispute as to whether such person failed to discharge his duty, such person shall bear the burden of proving that he did not fail to discharge his duty. [Germany, S. 26(3)]] Article 16. Costs for a Dismissed Petition When dismissing a petition for lack of grounds under Article 12 , the court shall also order the petitioner to reimburse the debtor, or creditors, as the case may be, for all reasonable legal costs incurred by such party or parties in attending to the petition. If the court finds that the petition was filed frivolously, maliciously or with intent to do wrongful harm to the debtor or creditors, the court may further order that the petitioner be held liable to such party or parties for all damages incurred by the party or parties as a result of the petition. Article 17. Publication and Notification of the Opening of Insolvency Proceedings (a) A court order opening insolvency proceedings shall be published, including in the [Official Gazette of the Kingdom of Cambodia]. (b) No later than seven days after the opening of the insolvency proceedings, the administrator shall publish notices, including by placing advertisements in at least two major newspapers in the Kingdom of Cambodia, announcing the following: (i) that insolvency proceedings have been opened against the debtor; (ii) the deadline for the submission of written proofs of claims; and (iii) the address to which all written proofs of claims should be sent. (c) No later than seven days after the administrator receives the statement of the debtor filed pursuant to Article 24 , the administrator shall notify in writing all creditors listed in the statement of the matters set out in paragraphs (b) (i) to (b) (iii) .
EFFECTS OF THE OPENING OF INSOLVENCY PROCEEDINGS (a) The opening of the insolvency proceedings shall create the estate. (b) The estate shall comprise all property, rights and claims of any kind in which the debtor has an ownership interest or to which the debtor is otherwise entitled on the date of opening of the insolvency proceedings or after that date, with the exception of, in the case of a debtor who is a natural person: (i) the primary place of residence of the debtor, the market value of which shall not exceed [Riels 20,000,000 – approx. US$5,200]; and (ii) personal clothing of the debtor, the aggregate market value of which shall not exceed [Riels 400,000 – approx. US$104]. [Note: This provision is based loosely on the UNCITRAL draft legislative guide. The exemptions in (b) above are retained from the March 1999 draft Cambodian bankruptcy law. he definition of “estate” may have to be harmonized with the relevant provisions for normal debt-collection situations in the Civil Code and/or the Law of Civil Procedure and Debt Enforcement. In particular, the exemptions in (b) above will need to be examined.] Article 19. Supervision of the Debtor and its Activities (a)
During the period up to the opening creditors’ meeting, the
debtor, its management or partners, as the case may be, shall continue to
exercise management and power over the debtor’s business and all assets in the
estate, subject to the general supervision of the administrator. [Note on (a): It may be useful to specify the kinds of transactions which must be approved by the administrator.] In the event it is shown that the debtor or its management or partners, as the case may be, has acted fraudulently or with gross negligence with regard to the debtor’s business either before the opening of or during the insolvency proceedings, the court may order that the (a)
management and power over the debtor’s business and all assets
in the estate be vested in the administrator, to the exclusion of the debtor,
its management or partners. (b)
The administrator or any creditor may at any time make a written
application to the court for an order under paragraph (b)
. Article 20. [Treatment of Joint Marital Property] [Note: Given Cambodia’s civil law tradition, and the possible applicability of earlier French-based laws/codes, this could be an issue. The position under the Civil Code will also need to be considered.] Article 21. Valuation of Encumbered Asset (a) No later than [thirty days] after the opening of insolvency proceedings, the administrator shall determine in good faith the value of any asset which is the subject of security held by a creditor for a claim. The administrator’s determination shall be valid unless challenged by the debtor or any creditor. (b) A valuation under paragraph (a) shall not be necessary if the administrator decides, before the expiration of the stated [thirty days], to permit a creditor to sell the asset which is the subject of security held by the creditor for a claim, and to apply the proceeds of the sale in satisfaction of the creditor’s claim. The portion of the creditor’s claim which remains unsatisfied after the application of the proceeds from the sale of the asset shall be eligible for satisfaction in the insolvency proceedings as an unsecured claim. |