The Resolution of Insolvency in Cameroon: Problems and Proposals for Reform

The Resolution of Insolvency in Cameroon: Problems and Proposals for Reform

Ngaundje Doris Leno (University of Buea, Cameroon)
DOI: 10.4018/978-1-5225-5541-4.ch009

Abstract

In a world driven by credit, a speedy resolution of insolvency will build predictability and commercial confidence among credit providers, resulting in increased credit and reduced borrowing costs, facilitating the resuscitation of viable businesses, thereby maximizing the going concern value and preserving jobs, and also benefit entrepreneurs and lower the rate of liquidation of distressed firms. With this, the chapter employs one argument that Cameroon has not registered a success in the resolution of insolvency. The purpose of this chapter, therefore, is to highlight and discuss the reasons behind the poor performance of the country in resolving insolvency. The value of this chapter lies in the contribution it makes in the understanding of the OHADA legal framework on insolvency and improvement of the country's performance in the Doing Business ranking on insolvency.
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Introduction

Economies are ranked on their ease of resolving insolvency. A high ease of resolving insolvency mean the regulatory framework is more effective and efficient; the importance of which cannot be overemphasized. According to the Organization for Economic Co-operation and Development (2001), an efficient and effective insolvency system builds confidence among credit providers, resulting in increased credit and reduced borrowing costs. It facilitates the resuscitation of viable businesses, thereby maximising the going concern value and preserving jobs. It also benefits entrepreneurs and lowers the rate of liquidation of distressed firms (International Monetary Fund, Legal Department, 1999). In spite of the modification and review of the Organisation for the Harmonisation of Business Law in Africa (OHADA) legal framework on insolvency (OHADA Insolvency Act, 2015), the paper argues that Cameroon has not registered a success in the resolution of insolvency.

If the author takes the indicator related to resolving insolvency, we are among the counties really who are not performing well worldwide (World Bank Report, 2017). The author attributes this to a number of reasons. The purpose of this paper, therefore, is to highlight and discuss the reasons behind the poor performance of the country in resolving insolvency. In so doing, the paper shall explore Cameroon and its current insolvency regime. The value of this paper lies in the contribution it makes in the understanding of the OHADA legal framework on insolvency and improvement of the country’s performance in the Doing Business ranking on insolvency.

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