Abstract:
The new Ethiopian bankruptcy law recognized under Book III of the new commercial code is set
to overcome problems connected with lack of pre-bankruptcy debt enforcement mechanisms. In
doing so, it introduced pre-bankruptcy proceedings whose primary aim is to promote economic
stability, maximizing the value of the estate and ensuring legal certainty through efficient,
effective and timely procedures. From among the newly introduced pre-bankruptcy proceedings
preventive debt restructuring procedure is the scope of this thesis. Preventive debt restructuring
procedure affords debtor businesses the opportunity to enter into court-supervised debt restructuring negotiations and settlements with their creditors without having to interrupt their
normal course of business. It is modeled after European insolvency and restructuring Directive
and UNCITRAL legislative guidelines. Assessing its basic features and procedures
comparatively with the modern model laws a barrier that have an adverse effect on the effective
use and implementation of the procedure are found. They are: the feature that limits the
initiation of the procedure to the debtor; the non-involvement of employee’s representative to the
procedure; its easy ground to set aside the confirmed restructuring plan and its viability
conditions to open the procedure. Hence, the Ethiopian bankruptcy law shall be reviewed in a
way that halts the problems found in this thesis for the effective use and implementation of the
procedure as well as to achieve the objective of the preventive debts restructuring procedure.
