Public education on Barbados’ Bankruptcy and Insolvency legislation is being called for by High Court Judge, Madam Justice Jacqueline Cornelius.
She was at the time addressing a meeting on the island’s Act, hosted in conjunction with IMPACT Justice and the Government of Canada.
The High Court judge told the gathering of lawyers and accountants at Accra Beach Hotel: “I do not believe that many people, business people, citizens and lawyers alike have any more than a very superficial knowledge of the intended purpose and effect of the Act. In our strongly debt-averse, almost Calvinistic culture, business failure is still seen as a moral stain, and personal bankruptcy the sign of an unredeemable financial profligacy.”
Seemingly urging education for all, Madam Justice Cornelius said: “Of course people must pay their debts and personal discipline is part of the success of the Barbadian story, so firmly is prudence and financial reserve a part of our psyche. But for both human beings and companies, the vicissitudes of life may militate against a glowing financial success, without any moral failing on the part of the insolvent. Culturally, we seem both enamored of consumer debt and disgusted by it.
“Thus programmes to help people to manage debt and indeed, even understand and properly utilize it, are very few, if any. In addition, there is a belief, which may or may not have a basis in reality, that access to credit is primarily governed by class and race considerations, and further that certain sections of the society are intrinsically better able to navigate the commercial landscape because of historical familiarity than others. So, this may lead companies to seek less financing than they should, be undercapitalized, and to seek help for their financial problems much too late.”
While providing insight into the origins of the Barbados Bankruptcy and Insolvency Act 2001, largely modeled after the Canadian system, Madam Justice Cornelius said it “gobbled the Canadian Bankruptcy and Insolvency Act almost whole”.
And, she pointed out that along with its stated intention of revising the law relating to bankruptcy and insolvency, the Act also incorporated both personal and corporate insolvencies; facilitated the making of debtors’ proposals and set out the role of the various actors, the trustee, debtors, creditors and court after such a proposal has been made.
Additionally, it abolished the official receiver and widened the role of the Trustee in Bankruptcy, giving that person the duty to counsel individual bankrupts and assist debtors in preparing the proposal.
The Act also permitted the automatic discharge of new bankrupts; created a regime for international insolvencies; defined reviewable transactions, and saw the creation of the office of the Supervisor of Insolvency, which falls under the Ministry of Small Business, Entrepreneurship and Commerce.
The Act was also regarded as intent on providing a streamlined regime based on the concept of a fresh start and debtor rehabilitation and to protect the interest of creditors in ways that are not unnecessarily punitive or humiliating.
And, those gathered at the meeting heard too that like Canadian legislation, it was intended to create a better commercial marketplace.
Madam Justice Cornelius noted that reliable, established rules provide security for investors and lenders and influence the cost and availability of credit in the market place.
“This can help attract higher levels of domestic and foreign investment while a fresh start provided by bankruptcy on legislation can offer a safety net that promotes entrepreneurship, all of these things that we want as a country. “Efficient bankruptcy and insolvency procedures contribute to the quick return of the debtor’s assets to productive use; and, this should also improve economic performance. Equitable treatment of stakeholders and transparent processes also help to protect the integrity of the insolvency regime,” she stressed.