Bahrain’s draft bankruptcy law

The Finance and Economic Affairs Committee of Bahrain’s Shoura Council has approved in principle a bill to reorganise the country’s bankruptcy law, state news BNA said on Tuesday.

Bahrain first introduced a bankruptcy law in 1987 but the new legislation is intended to update rules covering insolvency proceedings and strengthen the country’s business community.

Among the changes are the development of a system for the rehabilitation of institutions or individuals that file for bankruptcy “whenever possible”, according to BNA.

The new legislation also contains provisions to guarantee “equitable distribution among creditors in accordance with the rule of preferential, preferred and ordinary rights” in the event of a default and ensures creditor claims are treated equally, the news agency said.

The government hopes the changes will improve impartiality and transparency and speed up the bankruptcy process.

The committee approved the draft law before deciding to forward its report to the Bureau of the Council for discussion.

The government is seeking to push through the new law as a matter of urgency under efforts to encourage foreign investment.