Cabinet nod to draft fresh combined insolvency law

The Cabinet nod has been granted to draft a fresh combined law on insolvency, replacing the outdated and scattered insolvency laws currently in force.

President Ranil Wickremesinghe together with Justice, Prison Affairs and Constitutional Reforms Minister Wijeyadsa Rajapakshe on Monday sought the approval of the Cabinet of Ministers to authorise the Law Commission to discuss with the relevant parties and prepare and submit preliminary drafts of a new insolvency law within three months.

“As the existing provisions under those laws are not sufficient for the present needs,

there is a need to introduce a new combined law on insolvency,” the Government Information Department said.

Currently, provisions relating to consumer insolvency and unincorporated small business insolvency are in Insolvency Ordinance 1853 while provisions for company insolvency are mentioned in Companies Act No. 7 of 2007. 

According to a World Bank report, Sri Lanka’s current insolvency legal regime remains weak in keeping up with the modern times, particular in the absence of restructuring laws.