The Egyptian cabinet has approved a law abolishing prison sentences in bankruptcy cases and limiting punishment to a monetary fine, Minister of Justice Hossam Abdel-Rehim announced on Wednesday.
Abdel-Rehim said in a press conference that the new law restructuring insolvency procedures aims at establishing a mediating system to reduce resorting to the judiciary in bankruptcy cases.
The law also includes harsher punishments for false bankruptcy claims, as well as implementing measures to protect merchants and creditors.
Minister of Investment Dalia Khorshed said that the new bankruptcy law comes as part of the latest investment legislations adopted by the government to provide the maximum possible amount of guarantees for investors and businessmen.
A number of Egyptian investors took out a full-page advertisement in Egypt's Al-Ahram daily newspaper last month calling for President Abdel-Fattah El-Sisi to take "emergency measures" to save Egyptian companies and industries after the recent floating of the local currency.
The ad, signed by nine investors associations, explained that Egyptian companies are facing bankruptcy as they are required to pay back bank loans at the new exchange rate despite having already sold their products using the old rate.
Last September, the state's Central Agency for Public Mobilisation and Statistics (CAPMAS) revealed that bankruptcy decleration rulings rose to eight cases in 2015, comparison to four cases in 2014.
The report added that debt value in bankruptcy declaration rulings reached EGP 16.3 million in 2015 compared to EGP 3.3 million in 2014; a 401.2 percent increase.