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Restructuring and insolvency law in Port Moresby, Papua New Guinea is designed to address the financial distress of businesses and individuals. These legal processes provide a structured way for debtors to address their financial challenges, satisfy creditors where possible, and, in some cases, allow for a fresh start or a chance to continue business operations. Papua New Guinea’s legal framework for insolvency and corporate restructuring seeks to balance fair treatment of creditors with opportunities for the revival or orderly closure of struggling businesses. The legal system in Port Moresby, being the country’s primary commercial center, sees a range of insolvency and restructuring matters, from small local enterprises to large corporate entities.
Several common situations can arise where professional legal advice becomes essential in restructuring and insolvency matters:
A lawyer with expertise in restructuring and insolvency can help you understand complex legal obligations, protect your interests, navigate negotiations with creditors, and ensure compliance with statutory requirements. Early legal advice can often help stabilize financial positions and avoid unnecessary personal or corporate risks.
The restructuring and insolvency laws in Port Moresby, and Papua New Guinea more broadly, are primarily governed by the Companies Act 1997 and the Insolvency Act. These laws set out the procedures for entering into voluntary administration, creditors’ arrangements, liquidation, and bankruptcy. Key considerations in the local context include the role and appointment of liquidators or administrators, the treatment of secured versus unsecured creditors, the initiation of winding up proceedings, and the legal obligations of company directors during insolvency.
Some notable aspects of PNG's insolvency regime include:
Restructuring involves reorganizing a company’s finances and operations to address financial difficulties and avoid insolvency. Insolvency refers to the legal process when an individual or company cannot pay its debts as they fall due.
The main laws are the Companies Act 1997 and the Insolvency Act, along with related regulations and case law.
Insolvency can be initiated by the debtor themselves, by a creditor, or by the court in response to an application.
Yes, if directors continue to allow a company to trade while insolvent, they might be found personally liable for losses under the Companies Act.
Voluntary administration is a process where an external administrator is appointed to assess the company’s affairs and develop options for restructuring or liquidation.
Creditors may vote on key decisions, submit claims for debts owed, and sometimes nominate or replace liquidators or administrators.
Employees generally have priority claims over certain entitlements like wages and leave, paid out from available assets ahead of unsecured creditors.
Timelines vary depending on the complexity of the matter, but liquidation or administration can take months or, in complex cases, several years.
You should lodge a proof of debt with the liquidator or administrator and monitor distribution outcomes. Legal advice can help protect your rights and maximize potential recovery.
You can contact the Papua New Guinea Law Society, seek recommendations from business networks, or search for reputable law firms with insolvency expertise based in Port Moresby.
If you are seeking further information or assistance regarding restructuring and insolvency in Port Moresby, consider the following resources:
If you believe you may be facing restructuring or insolvency issues or are owed money by a struggling debtor, here are the recommended steps:
Taking timely and informed action with the help of qualified professionals will give you the best chance of protecting your interests and achieving a favorable outcome under Papua New Guinea’s restructuring and insolvency laws.
