Sri Lanka’s planned bankruptcy and insolvency legislation should treat apartment buyers as equal creditors alongside banks, a veteran financial professional told Parliament’s Committee on Public Finance, citing the Krish project in Colombo as evidence that the current legal framework leaves depositors stranded when developers fail.
Thilan Wijesinghe, head of investment consultancy TW Holdings, testified at COPF that the existing law recognises only banks as creditors in insolvency proceedings, leaving apartment buyers — who have paid deposits and instalments on unfinished developments — without comparable standing.
“In the case of the current law, only banks are considered as creditors,” Wijesinghe said. “I believe a law such as this should help the UDA, the government, the creditors, including contractors, not just the banks, to have an equal say, along with the owners, in resolving the matters, failing which, within specific time frames, to go to liquidation.”
He pointed to the stalled Krish building, currently described as “an eyesore” in central Colombo, as a case where the present framework proved inadequate as liquidation was attempted.
The Insolvency Bill — which permits all creditors to restructure debt in an orderly manner and gives troubled firms an opportunity to continue as going concerns — is scheduled for Parliamentary debate on May 5 as part of structural reforms required under the IMF programme. The Wijesinghe testimony, reported by EconomyNext on Sunday, signals one of the first substantive public-finance critiques of the Bill’s scope ahead of the floor debate.
Source: EconomyNext.
