Deal: Global law firm Norton Rose Fulbright has announced, after three years of “groundbreaking project work in Myanmar’, a new insolvency and restructuring framework has been established by the enactment of the Insolvency Law 2020.

Myanmar’s parliament recently enacted the new law, following its passage through both the lower and upper house late last year and it received presidential assent last week.

Value: Undisclosed.

Area: Public sector.

Key players:  Over a period of three years, Norton Rose Fulbright Sydney-based partners, Scott Atkins and John Martin together with special counsel Rodney Bretag, worked closely with the Union Supreme Court of Myanmar on the project to draft this law, an essential pillar to the rule of law in Myanmar, and part of the modernisation of the country’s economic laws fundamental to promoting success and prosperity in the conduct of trade and commerce.

Deal significance: The project was funded by the Asian Development Bank as part of its technical assistance to Myanmar, aimed at strengthening the legal and institutional framework of Myanmar for commerce and private sector investment.

The engagement represented the first example of the Union Supreme Court working collaboratively with international consultants in a project of this type.

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“This was a very rewarding engagement, particularly having regard to the necessary focus of the law on the impact of financial distress on micro, small and medium enterprises, the life-blood of Myanmar’s commercial life,” Mr Martin commented. 

“The law is reflective of the principles outlined in the World Bank’s extensive work in this area, and at the same time is innovative in how it implements that guidance.”

The appointment of Mr Atkins and Mr Martin as international experts in insolvency and restructuring law to draft the law followed a competitive international tender. The engagement presented the challenge of designing a law that was reflective of international best practices, and which could be integrated into Myanmar’s existing legal, judicial and regulatory framework. 

In a country whose economic development is in transition, the law needed to be tailored to what is workable and practical now, as well as accommodating best practice as the economy develops, presenting Mr Atkins and Mr Martin with a challenging assignment.

The drafting process was informed by guidance from international institutions, the UNCITRAL Model Law, and comparisons with modern insolvency laws across the world. The Norton Rose Fulbright team worked alongside the Asian Development Bank and Myanmar’s Union Supreme Court to help create the laws.

The framework established by the new law also reflects a growing view among governments across the world that insolvency systems should focus on value preservation and support the rehabilitation of viable businesses, rather than penalise directors and stigmatise failure. This view is supported by the World Bank, the International Monetary Fund and the United Nations Commission on International Trade Law (UNCITRAL).

“We believe these laws will have a transformative effect on the country and its economy, and provide much-needed support to the large numbers of small business owners and enterprises in particular. It will also [help recycle capital] in the economy in a way that will enable growth, create new jobs, and open the country to further foreign investment,” Mr Atkins said. 

“The overarching objective of these laws is to create a platform that both matches the present circumstances with Myanmar’s broader legal and commercial systems, and is sophisticated enough to maintain its relevance into the future as Myanmar’s economy develops. We believe that in real terms the new insolvency law will facilitate the broader economic reforms already underway across the country.”