File photo: Egyptian Parliament, Photo taken January 10, 2016. (AFP)
The Egyptian parliament approval preliminarily on Tuesday a law regulating debt restructuring, preventive composition and bankruptcy, MP Haitham El-Hariri told Ahram Online.
The law is expected to improve Egypt’s ranking in the World Bank’s Doing Business report, Investment and International Cooperation Minister Sahar Nasr told MPs on Tuesday.
The legislation guarantees protection for financially struggling investors, allowing debtors to file for bankruptcy.
Without a law to govern it, insolvency cases had previously been handled by the courts, with businessmen facing prison for not paying their debts.
The new law would put in place a mediating system to avoid referring cases to criminal proceedings.
The law also simplifies procedures and guarantees safe exit for companies that go bankrupt, with a possibility for integrating businesses back into the market through debt restructuring.
It also protects creditors by guaranteeing they are paid their dues.
The bankruptcy law complements the investment law, which was promulgated by the president in June to attract foreign investors and cut down on bureaucracy.
The law was approved by the cabinet in January 2017 under former Investment Minister Dalia Khorshid, and awaits final approval by MPs before being ratified by the president.
Egypt ranks number 115 in the Resolving Insolvency index in the Doing Business 2018 report, the lowest rank being 168.
Egypt dropped six places in the World Bank Doing Business report 2018 to 128 out of 190, down from 122 in the 2017 report, according to the latest report issued in November.