SECTION S - ASSESSMENT OF PROCESSES

In this Section we ask you to assess, by reference to various rating scales, the speed, cost and general efficiency of some of the procedures previously discussed in your country. Please give brief reasons where any such assessment is rated at the lower or negative end of the scale [indicated by an *].

S1. Is the process for taking of security over land to secure corporate borrowing:

Not expensive x
Easy x
Expensive Difficult * Very expensive * Very difficult Note: Mortgages can be created by deposit of title deeds for which purpose nominal stamp-duty is payable. However, in the Province of Sindh, stamp-duty at the rate of 0.2% of the secured amount is applicable (which is much less than the stamp-duty on a mortgage deed). Mortgages can be created by entry in the records of rights relating to any land to be mortgaged. This does not attract any stamp-duty. Very difficultx Quick x Efficient Slow * Inefficient * Very slow Note: Delays may, however, take place if permission of any authority or lessor is required for creating a mortgage. S.2 Is the process for taking of security over property other than land to secure corporate borrowing : Not expensive x Easy x Expensive Difficult * Very expensive * Very difficult Very efficient Quick x Efficient Slow * Inefficient * Very slow Note: Floating charge attracts nominal stamp-duty. However, a hypothecation attracts ad volarem stamp-duty of 1% for local banks. S3. Is the process for enforcement of security over land : Not expensive x Easy x Expensive Difficult * Very expensive * Very difficult Very efficient Quick Efficient Slow * Inefficient * Very slow Note: The process is in-efficient and very slow because of an in efficient legal system. S4. Is the process for enforcement of security over property other than land: Not expensive Easy Expensive Difficult * Very expensive * Very difficult x Very efficient Quick Efficient Slow * Inefficient x * Very slow x Note: Moveables tend to disappears, unless a pledge with possession has been created. S5. Is the process for debt collection: Not expensive Easy Expensive Difficult * Very expensive * Very difficult x Note: Debt collection is very difficult because of delays entailed in the legal system and enforcement of security. Very efficient Quick Efficient Slow * Inefficient x * Very slow x Note: Extremely inefficient and very slow because of delays and difficulties faced in enforcing security. S6. Is the process for winding up (liquidating) an insolvent corporate borrower : Not expensive Easy Expensive Difficult * Very expensive * Very difficult Very efficient Quick Efficient Slow * Inefficient * Very slow Note: Because the very existence of the debtor is threatened, the sponsors/owners use every trick in the book to resist. Secondly, the Courts are not always compliant. The Court's do not consider an action for winding-up as the best course for recovery. Therefore, the best, but inefficient and slow course, would be to file a suit for recovery and enforcement of security. S7. Is the process for the possible re-structuring of an insolvent corporate borrower : Not expensive x Easy Expensive Difficult x * Very expensive * Very difficult Very efficient Quick Efficient Slow * Inefficient x * Very slow x Note: The borrower and the lenders may not always agree on the terms of rescheduling. S8. What is the average time period between the filing of an application for the winding up (liquidation or bankruptcy) of an insolvent corporate borrower and the formal pronouncement that the corporate borrower will be liquidated: 1-2 months 2-4 months 4-6 months x Other 1 year Note: Delays in the Court and resistence by the borrower. S9. What is the average time period for the commencement of a formal procedure for the re-organisation or re-structure (including a composition) of an insolvent corporate borrower and the commencement of the implementation of an agreed formal plan of re-organisation or re-structure 2-4 months 4-8 months 8-12 months 12-18 months x Other Note: Delays in negotiation and the approval process. S10. What is the average time period for the commencement of an informal procedure (a "work out") for the re-organisation or re-structure (including a composition) of an insolvent corporate borrower and the commencement of the implementation of an agreed plan of re-organisation or re-structure: 2-4 months 4-8 months 8-12 months x 12-18 months Other Note: Lack of consensus between the creditors and the corporate borrower. S11. If there are relevant statistics available for the incidence of formal insolvency procedures for insolvent corporate borrowers do these show that the incidence for (a) liquidation/bankrupcy and (b) re-organisation/re-structure is: No statistics are available. On the basis of experience we assume that : (a) (b) Very high Very high High High Low x Low x * Very Low * Very Low Note: This is not done. Banks avoid because of delays. S12. What is your assessment of the predictability (positive, certain outcome) of the following processes in your country: (a) Security enforcement of land Very high High x Medium Low Very Low (b) Security enforcement of property other than land Very high High Medium x Low Very Low (c) Judicial handling of security enforcement Very high High Medium x Low Very Low (d) Judicial handling of debt collection Very high High Medium x Low Very Low (e) Judicial handling of insolvency (liquidation) cases Very high High Medium x Low Very Low (f) Judicial handling of cases of re-organisation/re-structure Very high High Medium x Low Very Low