“Due to the pandemic, significantly more businesses will apply for insolvency, so it is crucial to have an efficient system in place” - Nana Amisulashvili, a lawyer who, with USAID support, helped advocate for insolvency reform to help struggling businesses recover from challenges like COVID-19.
Nine years ago, lawyer Nana Amisulashvili faced a crisis. The company building her apartment—and the apartments of 200 other families—declared bankruptcy after finishing just 10 percent of the construction. She and her family were threatened with the loss of their investment with no compensation.
Nana had never worked on insolvency cases, but she was certain that the solution to her problem, and that of her neighbors, lay in the law. She set out to learn as much as possible about Georgia’s insolvency legislation.
What she found, however, was that although the existing legislation looked great on paper, it lacked the mechanisms necessary to ensure timely and efficient execution.
“The insolvency system’s main principle is that it should be ‘fast, low-cost, and efficient’ but the system fell short,” Nana said.
Her discovery—and the process of putting the company back to work to complete the apartments—inspired her to spearhead insolvency reform.
In 2018, USAID helped Nana and a group of experienced professionals establish the Business Rehabilitation and Insolvency Practitioner's Association. The association’s members received USAID-funded training and support, which enabled them to take part in drafting a new law and to launch a robust advocacy campaign to support its adoption.
The Parliament of Georgia finally passed the new insolvency law in September and it will enter into force in April 2021. Titled the “Law on Rehabilitation and Collective Satisfaction of Creditors,” the new legislation solves the issues that Nana identified as an insolvency practitioner, greatly easing the process for troubled businesses to return to growth. Once the law enters into force, when a company faces bankruptcy, there will be a clear pathway to help it recover as quickly as possible.
“When a business faces bankruptcy and its day-to-day activities are hampered, it is crucial for the rehabilitation plan to be created quickly, in order for the business to move forward and survive. The new law envisages the propositions ensuring this,” Nana said.
That is even more important today, with many businesses struggling with the economic impact of the pandemic. “Due to the pandemic, significantly more businesses will apply for insolvency, so it is crucial to have an efficient system in place,” she added.
