Mozambican government may bail out companies in financial straits

1 November 2012

The Mozambican government may support or even bail out companies facing financial difficulties in order to prevent job losses, ensure tax collection, and safeguard creditors’ interests, said the Council of Ministers spokesman Tuesday in Maputo.

Alberto Nkutumula said that the new legal regime for Insolvency and Recovery of Commercial Businesspeople was intended to improve current legislation, which focuses on safeguarding creditors’ interests.

“This proposal is intended to safeguard other interests that are also considered important, such as for example, maintaining jobs and collecting taxes, without sidelining creditors’ interests,” said Nkutumula.

Therefore the proposal rather than moving to sell off assets as quickly as possible or declaring bankruptcy, focuses on supporting the businessperson so that they can return to business as usual.

The legislative proposal will be sent to parliament which, following approval, will return it to the government in order for a decree-law to be put in place.

Nkutumula also said that any potential injection of public funds into insolvent companies or those on the verge of bankruptcy will require authorisation from the country’s parliament.

“It is the Republican Assembly (parliament) that will authorise the government to legislate for that or not,” said the spokesman cited by Mozambican daily newspaper Notícias. (macauhub)