Need to rehabilitate sick companies highlighted

ISLAMABAD: Given the stress caused on businesses and the resulting challenges, the Securities and Exchange Commission of Pakistan (SECP) organized a Webinar on Corporate Rehabilitation Act, 2018 (CRA) and the Corporate Restructuring Companies Act, 2016 (CRC Act) to create awareness about corporate insolvency laws. Honorable Justice Jawad Hassan, Commercial & Constitutional Judge of Lahore High Court graced the event as chief guest.

These laws provide a structured process for distressed companies to attempt their revival through corporate or financial restructuring plans and provide a well-defined mechanism for resolution of non-performing loans.

Justice Jawad Hassan supported the concept introduced by chairman SECP that “a company alive is better than a company dead”. He further said that now when the laws are in place, we need to introduce the policies and create awareness regarding these laws so that the sick companies may be rehabilitated.

Justice Jawad said that the present government and the SECP has full support of judiciary in order to ensure that laws related to restructuring and rehabilitation of companies be implemented properly instead of winding up every other company. He also appreciated the efforts of SECP and Qanoondan for organizing the session and reaching out to lawyers and judiciary to ensure that the mission of rehabilitation of corporate structure in Pakistan is achieved.

Addressing the webinar, the Chairman SECP, Aamir Khan emphasized the importance of an efficient mechanism for resolving insolvency to reduce failure rate among businesses and preserve jobs. He further stated that resolving insolvency must be a priority and these laws have improved our position on World Bank’s doing business index. He stressed that real success depends on their effective implementation help surviving businesses from the adverse impact of the pandemic.

Mr. Khan also highlighted the issue of non-performing loans of financial institutions, amounting to Rs853 billion as of Sept, 2020, that can be resolved through corporate restructuring companies. He also informed that one such company has already been licensed by the SECP besides introducing necessary amendments in CRC Act.

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