THE role and functions of the trustee under Jamaica's insolvency regime is to be strengthened through proposed amendments to the Insolvency Act, currently being reviewed by a joint select committee of Parliament.
Following Thursday's meeting of the committee at which the proposed changes were reviewed, Government committee member Senator Kavan Gayle told the Jamaica Observer that he believes the role of the trustee, as outlined in Section 227 of the principal Act, "is very critical" to the insolvency regime.
"What [legislators] are seeking to do is to expand the role and function in the amendment in [Section] 130 to give it greater effect," he said.
In outlining the proposed amendments to the section at Thursday's meeting, acting Supervisor of Insolvency Fayola Evans Roberts said the changes would ensure that the roles of the supervisor and the trustee will now be clearly defined.
"Section 130 currently provides for an examination to be made of the bankrupt by the supervisor. This section is being amended by vesting this responsibility in the trustee instead of the supervisor. This amendment was required to clarify the roles of the supervisor and the trustee. The trustee is the examiner as opposed to the supervisor," she said.
Under the insolvency law, a trustee is licensed and appointed by the supervisor of insolvency to administer the property or assets of a debtor for the benefit of creditors. In order to access the insolvency regime, the debtor must do so via a trustee.
Once appointed to act, with respect to the debtor's estate, the trustee receives, verifies, and admits claims by creditors; identifies, recovers, and manages or disposes of their assets; collects payments and invests estates funds; and as soon as reasonably practicable prepares and processes dividend payments to creditors in full or partial satisfaction of their debts.
In the meantime, legal counsel at the Ministry of Industry, Investment and Commerce, Yvette Sutherland Reid, noted that the World Bank's proposal to have creditors appoint trustees under Jamaica's insolvency regime had been rejected by local stakeholders.
The decision to dismiss the proposal, which was subsequently withdrawn, followed discussions with the Jamaican Bar Association, local creditors, and external consultants who were of the view that it would not be beneficial to the business person to have a creditor being able to intervene at that stage.
"It would not have the desired result originally intended, which is for you, the bankrupt, to be able to submit your proposal to restructure and get some assistance to do so because we don't know what would be the motive of this creditor, so it allows for a grey area, and we would not wish to go down that road," Sutherland Reid explained.
The Insolvency Act, which was enacted in 2015, provides for the regulation of insolvency for both individuals and businesses. It also ensures the fair allocation of the costs of insolvency with the overriding interests of strengthening and protecting the country's economic and financial system and the availability of flow of credit within the economy.
The Act is administered by the Office of the Supervisor of Insolvency (OSI), a department of the Ministry of Industry, Investment, and Commerce.
The OSI regulates the licensing of insolvency practitioners, inspects or investigates the administration of estates by the trustees, records complaints regarding the administration, and intervenes in court proceedings when it is expedient to do so.