Bangladesh—restructuring and insolvency guide

Produced in partnership with Shahwar Jamal Nizam and Abu Nazar of DFDL.
Practice notes

Bangladesh—restructuring and insolvency guide

Produced in partnership with Shahwar Jamal Nizam and Abu Nazar of DFDL.

Practice notes
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Questions

What is the primary legislation which governs corporate insolvency? And, are there any other laws in force dealing with corporate insolvency?

There are two laws that deal with bankruptcy and insolvency. They are (1) the Bankruptcy Act 1997 (Bankruptcy Act) and (2) the Companies Act 1994 (Companies Act). The Bankruptcy Act is the primary legislation that governs the bankruptcy laws in Bangladesh. While the Bankruptcy Act deals with bankruptcy in general, sections 234–321 of the Companies Act deals with the insolvency of companies.

Is there any conflict of provisions in the corporate insolvency laws?

No, there are no conflicting provisions between both laws.

Who can initiate a corporate rehabilitation proceeding under the insolvency laws?

Pursuant to the Bankruptcy Act, both the creditor and a debtor can file a petition under bankruptcy law in Bangladesh. Eligible creditors can file a petition on the ground of default of BDT 500,000 and the debtors can file a petition under the Bankruptcy Act if the debtor is unable to pay the debt amount of BDT 200,000.

Whereas,

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Jurisdiction(s):
United Kingdom
Key definition:
Insolvency definition
What does Insolvency mean?

This can be defined by two alternative tests (Insolvency Act 1986, s 123):

• cash flow test: a company is solvent if it can pay its debts as they fall due, no matter what the state of its balance sheet (Re Patrick & Lyon Ltd [1933] Ch 786);

• balance sheet test: a company which can pay its debts as they fall due may be insolvent if, according to its balance sheet, liabilities (including contingent liabilities) exceed assets.

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