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 at the next session scheduled for Sunday, April 29.
The government is seeking to push through the new law as a matter or urgency under efforts to encourage foreign investment.
Bahrain has been among the hardest hit in the Gulf Cooperation Council by lower oil prices, with S&P estimating the country’s ratio of government debt to gross domestic product jumped to 81 per cent last year.
Rival ratings agency Moody’s expecting government debt to reach 100 per cent of GDP by 2019.
Both have given Bahraini debt junk ratings.
However, the economy recently received an unexpected boost when the government announced the country’s largest oil discovery in decades.
The offshore find may exceed 80 billion barrels of tight oil and 10-20 trillion cubic feet of deep gas.