Cabinet has approved a draft bankruptcy and restructuring law, Al Masry Al Youm reported. Justice Minister Mohamed Hossam Abdel Rehim said the law aims to create an intermediary system that reduces the need to resort to court proceedings whenever companies go in arrears and simplifies post-bankruptcy procedures. The draft law creates a bankruptcy department within existing economic courts that would intermediate in restructuring processes in cases of bankruptcy. The law will also remove “debtors’ prison” clauses that left individuals going through bankruptcy facing imprisonment, but strengthened the penalties for bankruptcy fraud. Investment Minister Dalia Khorshid said the draft law is part of the legislative reform aimed at improving the business climate in Egypt. “Until now, Egypt has had no specific law on bankruptcy, meaning failed companies have had to go to court on a case-by-case basis,” Reuters notes.

We obviously want to see the details of both the law and its executive regulations, but this could be very good news indeed, marking a sea change in how bankruptcy is treated, particularly if there are strong provisions allowing a company to restructure with a measure of protection.