Let’s not rush into liquidating businesses – Oteng Gyasi
Former President of the Association of Ghana Industries (AGI) and CEO of Tropical Cables Limited, Tony Oteng Gyasi, appears unenthused about the central bank’s decision to liquidate the Capital and UT banks, saying businesses in distress are not necessarily “bad,” and should not be allowed to go down. “I don’t think it is right for us to be rather killing our businesses; there must be some kind of protection which can help us get businesses running. The whole end game is to put the company back into business but not to have a terminal end,” he told the B&FT at a meeting that discussed the ease of doing business in Ghana and reforms pertaining to the Companies and Insolvency Acts. According to him, many companies around the world go through distress, but that many of such jurisdictions have laws that help the companies to restructure.
Mr Oteng Gyasi, therefore, expressed hope at the meeting, organised by the American Chamber of Commerce, Ghana, and the Ghana Association of Restructuring and Insolvency Advisors (GARIA), that the new Insolvency bill before Parliament, would help get struggling companies in Ghana to restructure instead of sink. “I think insolvent companies are not necessarily bad businesses,” he said: “They might only be distressed and need either capital reinjection or assets restructured. And so, the new law demands that a court, upon application by the Registrar of Companies or the board of that company, either refuses or allows the company to go through restructuring.” Mr. Oteng Gyasi further stated that: “you can have a business whose model is good but has bad management, who are fraudulent; the managers could take bad decisions. This does not mean the business itself is bad. So, for the sake of the employees and the shareholders, it would be best for the company, in this situation, that the creditors stay off for some time, the management is changed, the bad decisions are corrected, which will allow the business to bounce back to be able to pay the creditors and shareholders.” The Corporate Insolvency Act, when passed, is expected to help companies going through trying times to restructure, under a supervisory regime, to protect creditors. It is also to ensure that if a struggling company cannot be helped, its liquidation is done in a manner that promotes efficient closure and transfer of assets. The bill makes provision for an Insolvency Services Division within the office of the Registrar of Companies to regulate insolvency services and practitioners. The collapse of the UT and Capital banks, both locally owned, has brought the banking industry into sharp focus, with critics lambasting the central bank for being lax in carrying out its regulatory mandate. But the central bank has defended its decision, saying it intervened on a number of occasions to help the two banks stay on their feet, to no avail, and so had to liquidate them. Chief Executive Officer of the American Chamber of Commerce, Ghana Simon Madjie, told the B&FT that Ghana’s laws must promote a healthy business environment. “Our goal is to enhance the business environment to encourage and increase FDI’s. And let me say that, an outdated Companies Act and Insolvency laws within this fast-paced environment will impede our goal to make Ghana the most desired destination for US investments.”
Source: Norvan Acquah-Hayford l thebftonline.com l Ghana