(a) Where a corporate borrower is in financial difficulty and an unsecured debt has become due, would it be usual or customary for an unsecured creditor (particularly, a bank creditor) and/or the corporate borrower to attempt to negotiate some suitable arrangement for repayment of the debt before the creditor invokes legal recovery methods?

Yes.

(a) What mechanisms are available under the legal system of this economy for unsecured creditors to collect debts owed to them by the corporate debtor?

 

Ordinary civil action for collection of money. The creditor may also attempt to obtain a writ of attachment but the grounds for its issuance are limited to those instances involving fraud.

(b) In practice, which method(s) of recovery of unsecured debts are most commonly employed by unsecured creditors of a corporate debtor?

 

The most commonly employed method of unsecured creditors to recover unsecured debt is by way of an action for collection of money.

E3. Effectiveness of judicial system

(a) How effective is the judicial and court system for the purposes of debt collection?

 

The judicial and court system for the purposes of debt collection is not so effective. The proceedings may take 6 to 8 years, or even longer, if appealed all the way to the Supreme Court.

(a) What effect, if any, does the commencement of insolvency proceedings against a corporate debtor have on debt recovery proceedings?

 

See answer in I5(a)((iv).

(b) What effect, if any, does the formal pronouncement of an insolvency administration in respect of the corporate debtor have on debt recovery proceedings?

 

See answer in I5(a)((iv).