Lubricating the Application of Preventive Measures Available to a Company in Difficulty
AbstractCompanies are a convenient way of doing business, but the life of a company is never uneventful. It may go through some difficult periods, which if not redressed may result to insolvency. With the demise of Arthur Andersen, Enron and WorldCom, companies and countries alike have become increasingly sensitive to signs of corporate demise and insolvency. As a consequence, many countries including the Organisation for the Harmonisation of Business Law (OHADA)’s legislator have designed different measures or solutions to help companies in difficulty (les enterprises en difficultiés) weather any storm they may encounter. It is worth mentioning that the measures designed by the OHADA’s Legislator are not confined only to traders, but in general apply broadly to artisans and moral persons of all kinds. One thing is the provision of the measures; while the other is implementation. It is against this backdrop that the paper argues that in spite of the availability of the preventive measures, companies in the OHADA circumference have run afoul of the Law for one reason to the next. With this, the paper seeks to distinguish between financial difficulty, insolvency and bankruptcy; to explore the various preventive measures available to a company in difficulty and the reasons why companies have run afoul of the law with the aim of educating investors, entrepreneurs and the society on what it takes to address any difficulty a company may face and to lubricate the application of the preventive measures. Keywords: Preventive Measures, Company in Difficulty, OHADA-Uniform Act on Companies, Insolvency
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