Khaled Al-Shafei، an economic expert، said that the parliament’s approval in principle to pass a new bankruptcy law constitutes another boost to the investment climate. He noted that the new law comes as a complement to a package of legislative reforms that pave the way for attracting more foreign direct investment، as the articles of the new law contribute to improving Egypt's ranking in global indices، business environment and investment. He added that the new law abolishes prison sentences in bankruptcy cases and limits punishments to a monetary fine. It also aims to minimize the need for companies or individuals to resort to the courts and to simplify post-bankruptcy procedures.
Until now، Egypt has had no specific law on bankruptcy، meaning failed companies have had to go to court on a case-by-case basis، which caused difficulties such as long judicial procedures، he added.
He pointed out that the new approved law is supposed to address these issues as it aims to simplify procedures after declaring bankruptcy. The law would cut down on lawsuits and protect foreign investors as it removes the danger of imprisonment and only requires the possible payment of fines in bankruptcy cases.
In this way، the law conveys a message of reassurance to foreign and domestic investors that they can liquidate or declare bankruptcy without being subjected to imprisonment، He added.
Once it is finally approved، the law will allow any business that is close to bankruptcy to have the option of conciliation with its creditors or restructuring its financial position، He added.
He stressed that the new law is expected to improve Egypt’s rating in global indices such as the Global Competitiveness Index (GCI) and Doing Business Report because criteria for ease of exiting the market are currently major obstacles for the business environment.