The legal regime for recovery of debts is set to undergo a fundamental change if a proposed new law is enacted.
In the Law of Contract (Amendment) Bill, 2019 (“the Bill”) introduced to Parliament on 28th January, 2019; creditors may soon be required to first go after the assets of a principal borrower before resorting to the guarantor’s assets.
This will likely deal a blow to creditors, among them commercial banks and micro finance institutions who have hitherto had a free hand in picking which assets to sell, upon default of a borrower.
We shall closely follow the Bill’s progression in Parliament and keep you informed on its fate.
The Bill can be found here.