New OHADA Uniform Act Streamlines Collective Insolvency Proceedings

July 18, 2016

Innovations to the Act in late 2015 seek to modernize and simplify collective proceedings in OHADA member states.

On 10 September 2015 in Grand-Bassam (Republic of Côte d’Ivoire), the Organization for the Harmonization of Business Law in Africa (OHADA)[1] proceeded with the adoption, by the Council of Ministers of OHADA, of a new Uniform Act organizing collective proceedings for debt forgiveness (procédures collectives d’apurement du passif (AUPC)).

The new Act, in sum, tends to improve the speed and efficiency of collective proceedings and to encourage the continuation of sustainable businesses and substantial payments to creditors. It is therefore likely to promote the development of credit as well as encourage private sector growth in the countries of the OHADA area. The Act is intended to constitute a lever for access by companies to better funding, the preservation and creation of employment, and the promotion of economic growth in the OHADA member states.

Published in the Official Gazette of the OHADA on 25 September 2015, the new text entered into force on 24 December 2015 is directly applicable in each member state, and prevails over national laws in cases of conflict.

Key Innovations Introduced by the AUPC

The main innovations introduced by the AUPC concern

  • the introduction of a conciliation procedure to encourage the continuation of businesses that face difficulties but aren’t insolvent yet;
  • the introduction of simplified procedures for preventive settlement, judicial settlement, and asset liquidation adapted to small economic entities;
  • the introduction of deadlines, noncompliance with which is subject to penalty, in order to reduce the implementation time of collective proceedings;
  • the definition of a legal framework for bankruptcy administrators and liquidators, with a view to ensuring competence, ethics, and providing a framework in terms of compensation;
  • the introduction of a “new money” privilege for those who grant new credits to a distressed company to improve its reorganization or recovery;
  • the clarification of the priority rankings between creditors;
  • the establishment of a new cross-border insolvency regime based on the model type law of the United Nations Commission on International Trade Law (UNCITRAL).


If you have any questions or would like more information on the issues discussed in this LawFlash, please contact Olivier Chambord.

[1] Benin, Burkina Faso, Cameroon, Central African Republic, the Comoros, the Republic of Congo, the Ivory Coast, Gabon, Guinea, Guinea-Bissau, Equatorial Guinea, Mali, Niger, Senegal, Chad, Togo, the Democratic Republic of Congo.