Abstract:
The ranking of creditors’ claims is a salient aspect that affects the distribution of the proceeds realised out of the assets of the insolvent estate. Ugandan insolvency law divides creditors into secured and unsecured creditors. Therefore, when it comes to the order in which debts are paid from the proceeds of the insolvent estate, sections 11 to 14 of the Insolvency Act 2011 of Uganda provides for an order of distribution alongside the statutory preferent claims of creditors. This order is similar to insolvency laws in other jurisdictions.
This study will briefly describe the insolvency procedures and recognised creditors in Uganda, specifically the provisions of sections 11 to 14 of the Insolvency Act. It will further undertake a comparative study of the rules pertaining to the settlement of secured and unsecured debts in selected jurisdictions. This study will determine which debts are prioritised for payment in Uganda and the selected jurisdictions, and whether the ranking of creditors is fair. It will further ascertain whether there are any new classes or priority claims in other jurisdictions which should be introduced into the Ugandan system.
An analysis of policy considerations, principles and guidelines set forth by the World Bank Reports on the manner that insolvency systems should operate will be undertaken. This analysis will enable the identification of specific recommendations made in the Reports that relate to the manner in which insolvency systems should approach distributions, especially regarding priority claims and their ranking.
Therefore, against the background of the findings of the comparative study and the recommendations by the World Bank Reports, the study will ascertain whether the Ugandan order of distribution, particularly the statutory preferent claims of creditors, are aligned with international standards. The study will be concluded by determining whether there are any new classes or types of debt to be included or excluded from the Insolvency Act 2011.
