Mauritius : Insolvency and Creditor Rights Systems

The Bank assessed the Mauritius insolvency and creditor rights systems pursuant to a joint IMF-World Bank initiative to develop reports on the observance of standards and codes ("ROSC"), based on the Bank Principles and Guidelines for Effective Insolvency and Creditor Rights Systems during 2002. The assessment team interviewed a cross section of country stakeholders regarding the effectiveness of the legal infrastructure, and its implementation supporting debtor-creditor relationships, corporate insolvency and credit risk management and resolution practices. Conclusions in this assessment are based largely on a review of applicable legislation and information gathered through interviews conducted by the staff team, and other inputs provided by the Steering Committee on Insolvency and Creditor Rights set up by the Government of Mauritius in January 2003. In addition, five commercial banks provided responses pertaining to credit risk management and corporate recovery practices with respect to distressed assets. Policy recommendations include: creditors rights and enforcement areas, some fine tuning is required to broaden the use of security interests on movable and immovable property, and to ascertain the maximization of the value of the assets for sale upon seizure; enforcement procedures should be streamlined further by accelerated debt recovery rules and more efficient procedures for execution, enforcement and auctions; Credit Information Bureau should be established in Mauritius, and, the government should encourage the development of Credit Rating Agencies. On the legal framework for corporate insolvency, a global reform of the insolvency procedures should be pursued in order to provide Mauritius with a modern and efficient commercial insolvency law. It is also recommends the necessary amendments to the Bankruptcy Act and Bankruptcy Rules to take care of both traders, non-traders and companies insolvencies, and, the harmonious and uniform recovery procedures for all debts, including amounts due to the State.