Myanmar: Myanmar Set To Adopt New Insolvency Laws Including A Corporate Rescue Procedure

Last Updated: 2 July 2018
Article by Bruno Arboit

The Republic of the Union of Myanmar moved a step closer to the adoption of new insolvency and restructuring laws with public consultations for the proposed laws recently taking place in Nay Pyi Taw and Yangon. It is proposed that the new laws will be finalised and put before Parliament in the latter part of 2018 and enacted in 2019.

The initiative has been driven by the Asian Development Bank (ADB).1


Myanmar is transitioning from over 50 years of military rule and a centrally planned economy towards a free market economy.

As a common law jurisdiction, Myanmar's existing corporate insolvency laws are set out in the Myanmar Companies Act 1914, which essentially reproduces 19th century British insolvency laws. In many respects the existing insolvency regime is outdated.

A new insolvency system is required to encourage the greater availability of credit and provide a more effective means of dealing with financial distress and failure.

The new law has been developed over the course of a number of in-country visits by the ADB team, working in conjunction with a number of Myanmar government bodies including the Union Supreme Court.

Myanmar has a population of approximately 54 million, but is characterised by a significant income gap. Recent reforms and developments carried out by the new government, in collaboration with foreign countries and organisations has fuelled economic growth and a growing consumer middle class. However, over 80% of the country's enterprises still comprise micro and small to medium enterprises ("MSMEs") with less than 10 employees. Accordingly, the new insolvency laws have been designed to cater for the specific characteristics of the Myanmar legal and commercial environment, including MSMEs.

Key features of proposed new Insolvency Law

The new law is based on common law tradition but reflects modern international best practice. It will cater for both corporate and personal insolvency, including specific provisions for MSMEs.

Companies and MSMEs in financial distress will have the option of following the traditional liquidation route or alternatively opting for rehabilitation proceedings while enjoying a moratorium from legal proceedings. Among other things, the rehabilitation proceeding provides for the appointment of an insolvency practitioner as a Rehabilitation Manager to oversee the company. It is the responsibility of the Rehabilitation Manager to prepare a rehabilitation plan for the company, to be approved by creditors within 3 months (which may be extended) of appointment. The objective of the rehabilitation plan is to rescue the company as a going concern. However, if this is not possible, then to ensure that there is a better result for creditors than under a liquidation.

The rehabilitation proceedings may be commenced by the company itself, a secured creditor or the Court. During the course of the rehabilitation, the Rehabilitation Manager assumes personal liability for debts of the company incurred during the process. Secured creditors are barred from enforcing their security without permission of the Court or the Rehabilitation Manager.

A liquidation may be commenced voluntarily by the company, by order of the Court or automatically following the failure of a rehabilitation plan. The proposed test for insolvency is a "cash flow" test. A company's insolvency will be presumed if it fails to comply with a statutory demand within 21 days of service.


The law defines an MSME as a company whose debts are less than 10 million Kyats (approximately US$7,500) or an individual or partnership whose debts are more than 1 million Kyats (US$750).

The proposed law provides for a simplified and less expensive rehabilitation process for MSMEs but is otherwise generally consistent with the rescue provisions that apply to companies.

The proprietors of an MSME may appoint a Rehabilitation Adviser. However, the MSME proprietors/directors remain in control and the role of the Rehabilitation Advisor is simply to advise. The Rehabilitation Adviser is not personally liable for the debts of the MSME.

Personal Insolvency

Aside from formal bankruptcy, the draft law encourages debtors to reach voluntary arrangements with their creditors both before and after an individual is declared bankrupt.

As in Hong Kong, voluntary arrangements will entail a debtor submitting a proposal to a nominated insolvency practitioner who will review and report on the proposal and, if appropriate, seek the approval of creditors. The arrangement is subject to judicial review.

The draft law provides for a term of 3 years for the duration of a debtor's bankruptcy, upon which the bankrupt will be automatically discharged unless the trustee obtains an order extending the administration.

The Model Law on Cross Border Insolvency

Myanmar's existing laws make no provision for cross border insolvency. Accordingly, the draft law includes adoption of the model law as a means of encouraging foreign investment and to facilitate international insolvencies that have an element in Myanmar.


Adoption of new insolvency laws modelled on international best practice principles will no doubt assist in the economic development of Myanmar. However, the country will still need to address a number of other related issues including the capacity of the existing legal system and the shortage of experienced insolvency professionals.


[1] The ADB advisory team consists of:

  • Patricia Rhee and Nicholas Moller of the ADB
  • Scott Atkins, John Martin and Rodney Bretag of Norton Rose Fulbright Sydney office
  • Melinda Tun and Khin Thandar
  • Bruno Arboit of KRyS Global Hong Kong

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions