Egypt's House of Representatives gave its final approval to a new bankruptcy law on Sunday, in a plenary session attended by Investment and International Cooperation Minister Sahar Nasr. The law's promulgation is a credit positive for banks in Egypt, Moody's said last week.
The law, which had been preliminary approved by the House on 9 January, abolishes prison sentences in bankruptcy cases and allows companies to restructure, easing post-bankruptcy procedures.
The 262-article legislation also allows for debt reconciliation that protects from bankruptcy in case.
Previously, bankruptcy cases have been referred to courts on a case-by-case basis.
A division for “bankruptcy management” will be created within each economic court to be tasked with receiving requests for restructuring, reconciliation to protect from bankruptcy, bankruptcy, and managing mediation procedures, as per the law.
Restructuring aims at re-organising the administrative and financial situation through ways including a revaluation of assets, debt restructuring, administrative restructuring and capital increase, according to Article 18 of the law.
The bankruptcy law complements the investment law, which was promulgated by the president last June to cut red tape and attract foreign investments.
That law guarantees a safe exit for investors.
The bankruptcy law is also expected to improve Egypt's rank in the World Bank's Doing Business report.
Egypt ranks number 115 in the Resolving Insolvency index in the Doing Business 2018 report, the lowest rank being 168.
Egypt also dropped six places in the World Bank's Doing Business 2018 report to 128 out of 190, down from 122 last year.
