URSB shifts focus to saving businesses from collapsing

Friday November 15 2019

Businesses such as Uchumi have h

Businesses such as Uchumi have had to close because of failure to service debts. FILE PHOTO  

By MARTIN LUTHER OKETCH

Kampala- Uganda Registration Services Bureau (URSB) is moving its mandate from just being a liquidator to debt restructuring.
The shift will involve saving businesses from collapsing under the burden of debt to finding solutions through which business can be sustained through debt.

Debt restructuring allows a company facing a cash flow problem to reduce or renegotiate its debts to improve or restore liquidity.
The process allows a company experiencing financial distress to find alternative ways through which it can stabilise without collapsing.

Speaking during the third URSB insolvency conference in Kampala early this week, Mr Mustapher Ntale, the URSB liquidation manager, said debt restructuring is one of the best ways of resolving insolvency because it allows continuity of the company.

“Through debt restructuring one can re-negotiate the terms of the loan,” he said, noting that it is not enough to liquidate a business because the owners have failed to pay a debt at an appointed date.

“Debt restructuring: it is for your business to continue surviving and operating normally. You must engage in renegotiating the terms of the debt,” he added.

URSB is seeking to find optimistic solutions to business failure, much of which has been a result of failure to service debt.
Debt restructuring can be achieved through direct negotiations with creditors or imposed on companies that fail to honour the terms of the agreement.

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Drawing examples from the international scene, Amb Francis Butagira, the URSB chairman, said countries such as Singapore and the UK have become debt restructuring hubs, which has greatly improved their ease of doing business.

Trade Minister Ameila Kyambadde, said insolvency remains a big issue in Uganda and has disrupted the flow of doing business. To be on a better side, she said, businesses must always endeavour to explore all alternatives before they resort to insolvency.

“You cannot do business without credit, it is not crime to take loans (credit), your loan is part of the business,” she said.

Insolvency Act
Uganda has the Insolvency Act 2011. However, according to Ms Kyambadde, it remains a largely unknown law thus failing to benefit the business community.
moketch@ug.nationmedia.com

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