Insolvency and restructuring: Law N° 075/2021 on insolvency, the tests and who may apply, the moratorium and secured creditors, compromise, provisional administration and administration, court reorganisation and rescue finance, insolvent liquidation and the ranking of claims, clawback, directors' exposure and cross-border recognition

The 2021 insolvency law and who runs the process

Law N° 075/2021 of 06/12/2021 relating to insolvency replaced Law n° 23/2018 of 29/04/2018 relating to insolvency and bankruptcy on its publication on 30 December 2021 (Articles 273 and 274), and all cases then pending are heard under it, although procedural steps already taken remain valid (Article 271). It applies to voluntary mechanisms used by a company, partnership or individual to avoid insolvency, to insolvency of companies, partnerships and individuals, to the liquidation of insolvent and of solvent companies and partnerships, to insolvency practitioners and to cross-border insolvency, and governs insolvency matters not provided for in other laws (Article 2). No amendment had been published at 10 October 2026.

Three actors run the system. The Commercial Court, which has jurisdiction over insolvency cases under Article 81 of Law N° 30/2018 of 02/06/2018 determining the jurisdiction of courts, is solely competent to appoint an insolvency practitioner (Article 9) and supervises reorganisation and liquidation. The Registrar General, head of the Office of the Registrar General (ORG) within the Rwanda Development Board (RDB), is 'the chief administrator responsible for insolvency proceedings': he or she keeps the insolvency file, may investigate, may intervene in any insolvency case, informs the prosecution of offences against the debtor's property and appoints provisional administrators (Article 4), and may appoint a practitioner provisionally to prevent loss, or where a court appointee is not approved by creditors, resigns or fails (Article 9). The insolvency practitioner, acting as provisional administrator, administrator, liquidator, supervisor or trustee, must be licensed (Article 231). For banks, insurers and capital market licensees, the National Bank of Rwanda (BNR) or the Capital Market Authority (CMA) is the 'regulatory authority' with standing to apply (Article 3(25)), alongside their own supervisory powers.

Tests, applications and the effect of opening proceedings

Insolvency proceedings commence when the debtor is unable to pay its debts when they fall due in the normal course of business, or when its assets are less than its liabilities plus its stated capital (Article 7). The second limb is unusual: a company whose net assets have fallen below its stated capital meets the test even if it is still paying its debts. An application for a company is filed with the competent court by creditors, the debtor, its directors or any of them, the Registrar General, the shareholders or partners, or the regulatory authority (Article 8). Secured creditors are summoned before the court decides. A creditor must show its interest, its claim and why proceedings should commence. The application includes a detailed list of debts and claims and the relevant financial and accounting reports (Article 10). Where the assets plainly cannot cover the costs, the court does not appoint a practitioner but declares the debtor insolvent and orders the Registrar General to distribute what assets there are (Article 8).

From commencement, the moratorium in Article 11 stays the starting or continuation of individual actions concerning the debtor's assets, rights and liabilities, the execution of judgments against its property, a counterparty's right to terminate any contract with the debtor, and the right to transfer, mortgage or otherwise dispose of the debtor's assets; the court may ease these measures. Under Article 12 the rights of secured creditors and holders of retention rights are not stayed, unless the debtor shows with its application an intention to submit a reorganisation plan; then all claims, secured ones included, are stayed from the date of application, the plan must be submitted within three months, the stay may not exceed six months in total, and if the court has not decided by then the secured creditor may enforce (Mortgages, security and the real estate business). Suppliers of electricity, water and telecommunications may not cut off supply, or demand payment of pre-commencement arrears as a condition of supply (Article 13). Leases continue, employment contracts and labour law must be observed, and the administrator or liquidator may terminate a contract not fully performed by both sides, leaving the counterparty with an unsecured claim (Article 14).

Compromise and administration

A compromise is the lightest corporate tool. The debtor, a practitioner or a creditor may propose a plan (Article 31) listing the assets and those held as security, a current financial statement prepared by a certified public accountant, the classes of creditors and their claims, how each class will be paid, and what each class would probably receive in a liquidation (Article 32). Public notice and individual notice to each known creditor must be given at least ten working days before the meeting, and from the notice all proceedings against the debtor's property are stayed unless the court decides otherwise, although a secured creditor may still enforce its charge (Article 33). The compromise is approved by 75% of the votes of all creditors taking part in the vote, class by class; approval by one class is presumed conditional on approval by every other class voting, unless the resolution says otherwise (Article 35). Once approved it binds the company and every creditor to whom notice was given (Article 39). Within 20 working days of notice of approval, a creditor entitled to vote may ask the court to release it on grounds of insufficient notice, material irregularity, or unfair prejudice to a dissenting creditor or its class (Article 40).

Provisional administration is a faster, Registrar-led rescue. The debtor, its directors, a practitioner, a creditor, the shareholders or the regulator may ask the Registrar General to appoint a provisional administrator, and the Registrar General must do so within five working days, failing which the applicant may go to court (Articles 41 and 42). The appointment takes effect only when the Registrar General holds the administrator's written consent and, importantly for lenders, the consent of any secured creditor holding a charge over the whole or substantially the whole of the company's property (Article 43). The administrator calls a creditors' meeting within five working days to consider the appointment, and creditors may replace the administrator (Article 44); within 20 working days the administrator puts proposals to a second meeting, with a report on the business and an opinion on whether creditors are better served by an administration deed, by ending the administration or by liquidation (Article 54). During provisional administration no liquidation application or resolution may proceed, any liquidator's powers are suspended, and enforcement of charges and other proceedings require the administrator's consent or a court order, without prejudice to a secured creditor's right to realise its security (Article 53). Approved proposals become an administration deed (Article 55) that must state the property available, the extent of the company's release, the order of distribution and the cut-off date for claims (Article 57). Dissenting creditors may go to court, which considers whether the company is likely to meet its future obligations and whether dissenters will receive at least as much as in liquidation (Article 56). If creditors vote for liquidation, or the deed is not executed in time, the shareholders are deemed to have resolved to wind up and to have appointed the administrator as liquidator (Article 79).

Court-supervised reorganisation and rescue finance

Reorganisation is the court procedure for a business worth saving. The debtor, its directors, a creditor, the Registrar General or the regulator may apply, with a certificate signed by the applicant that there is reason to believe the business can be rescued, and everyone likely to be affected is notified (Article 84). The court may order reorganisation and appoint a provisional administrator if satisfied that there is a reasonable prospect of rescue, that the company will likely meet its future obligations as they fall due, and that dissenting creditors will receive as much under the plan as in liquidation (Article 85). From commencement no proceedings, including enforcement, may be started or continued against the company or its property; for secured creditors the stay lasts six months from the application, renewable at most three times by the court on strictly evaluated indicators (Article 87). A secured creditor may apply for relief where its asset may lose value or be destroyed, it is not compensated for the loss of value, protection is not feasible, the asset is not needed for the rescue, or the plan is not approved within 30 days (Article 88).

The administrator prepares the reorganisation plan within 45 days of the order, after consulting creditors and directors (Article 89), convenes a meeting within 15 working days of completing it on at least ten working days' notice (Article 90), and the plan is approved by not less than 75% of the creditors, or of each class, taking part in the vote (Article 91). Creditors in the same class must be treated equally, and any difference needs the consent of every creditor in that class (Article 92). The administrator takes custody of the business and runs it with the aim of rescuing it in the interests of creditors and shareholders, keeps its money separate and keeps records for ten years (Article 93). Reorganisation ends when the plan is implemented, the creditors resolve to end it or to appoint a liquidator, the company fails to carry out the plan in time, or the court appoints a liquidator (Article 96).

Once a debt arrangement, compromise, administration or reorganisation has commenced, the debtor may seek business rescue finance from existing creditors or others to keep trading (Article 97). The practitioner calls a creditors' meeting with full details of the proposed finance (Article 98); approval needs a majority of the votes validly cast in each class (Article 99), and the approved finance is paid in priority over other unsecured debts (Article 100), though not ahead of secured creditors. A creditor may challenge the approval within 20 working days (Article 101). For a foreign parent or a fund willing to support a Rwandan subsidiary, this priority is the main protection the law offers for new money advanced during a rescue.

A court reorganisation, from application to plan

1. Prepare the applicationDebtor, directors, a creditor, the Registrar General or the regulator files with the Commercial Court, with the certificate that the business can be rescued, a detailed list of debts and claims and recent accounts (Articles 10 and 84).
2. Notify affected persons and secured creditorsEveryone likely to be affected is notified (Article 84) and secured creditors are summoned before the court decides (Article 8).
3. Court order and administratorThe court orders reorganisation and appoints a provisional administrator if rescue is reasonably likely and dissenters will get at least liquidation value (Article 85).
4. Stay takes effectNo proceedings or enforcement against the company; secured claims stayed for six months from the application, renewable up to three times (Article 87).
5. Arrange rescue finance if neededCreditors approve by majority of votes cast; the lender ranks ahead of unsecured creditors (Articles 97 to 100).
6. Prepare the plan within 45 daysThe administrator consults creditors and directors and completes the plan (Article 89).
7. Creditors' meetingConvened within 15 working days of the plan on at least ten working days' notice to each known creditor plus public notice (Article 90).
8. Vote by classApproval needs 75% of creditors taking part in each class, with equal treatment within a class (Articles 91 and 92); if the plan is not approved within 30 days, secured creditors may seek relief from the stay (Article 88).

Insolvent liquidation, claims and the ranking of creditors

The court may appoint a liquidator on the application of the company, a director, a shareholder, a creditor or the Registrar General where the company is unable to pay its debts, has persistently or seriously failed to comply with the Companies Law, no longer has the essential features of a private or public company, or where it is just and equitable (Article 104), and may appoint a provisional liquidator to preserve the assets pending the hearing (Article 105). The liquidation then follows the procedure described in Liquidation, striking off and deregistration: notice within five working days, a report within 20 working days, interim reports every six months and removal after the final report. Sales of the business, of all equipment or stock, or of shares intended to create a lasting affiliation, are transactions of particular importance requiring the consent of the creditors' committee or, where there is none, of the creditors (Article 214). On the application of the liquidator, a creditor or a shareholder, the court may order a related company to contribute to the claims in the liquidation, or order the liquidations of related companies to proceed as if they were one (Article 125), having regard to the related company's part in management, its conduct towards creditors, its responsibility for the failure and how far the businesses were combined; reliance by creditors on the group link is not enough on its own (Article 126).

Claims are valued at the commencement date, without interest after commencement (Article 204), with set-off of mutual debts (Article 206); rejected claimants may revise within ten working days and go to court within 21 working days (Article 209). A secured creditor is entitled to separate satisfaction from its collateral, its priority depends on the date of registration of its security rather than the date of the debt, and any shortfall ranks as unsecured (Article 208). The administrator then pays in the order set by Article 212, and any surplus goes to the shareholders under the articles (Article 213). Two features stand out. Employees rank above the State: six months' wages, accrued leave and severance come before both social security contributions and taxes. And practitioners' costs, including essential services supplied after commencement, come before secured creditors, so a secured lender bears its share of the costs of realisation.

Clawback: transactions a practitioner can unwind

A preference is voidable on the practitioner's application where a transfer of the company's property was made on account of an existing debt, when the company could not pay its due debts, within the year before the commencement of the liquidation, and enabled the recipient to receive more than it would in the liquidation (Article 215). A transfer made in the six months before commencement is presumed, unless the contrary is proved, to have been made while unable to pay and for a debt not incurred in the ordinary course of business. Payments of debts incurred in the ordinary course of business and paid within 45 days after the debt was incurred are excluded. Transactions made with actual intent to defraud creditors, known to the counterparty, are void whenever made. A transaction at undervalue within the year before commencement is voidable where the company received significantly less than it gave and was, or became as a result, unable to pay its debts, or was left with unreasonably small resources (Article 216). A charge given for an existing debt is voidable unless it secured new value given before the charge and the company was solvent immediately after, or replaced a charge given more than a year before; a charge given within six months before commencement is presumed to have been given while insolvent (Article 217).

The practitioner files a notice in court and serves it on the counterparty; the transaction is set aside after the 20th working day unless the counterparty applies to the court (Article 218). The court may order repayment of the benefit, return of property, release of a charge or security for the order, and the counterparty who gives up the benefit may prove as a creditor (Article 219). A third party who acquired the property for value and without knowledge keeps it, and recovery may be refused against a recipient who received in good faith and changed position (Article 220). For a buyer of distressed assets, these rules mean that a purchase at a fair, documented price, at arm's length and supported by a valuation is the main protection, and that a sale by a struggling seller in the year before its insolvency can be reopened.

Directors, shareholders and personal exposure

Directors carry the main personal risk. Under Article 150 of Law N° 007/2021 of 05/02/2021 governing companies, a director must not agree to the company entering a transaction that involves an unreasonable risk of failing the solvency test, or incurring an obligation unless he or she believes on reasonable grounds that the company will be able to perform it. Liability for acts before a company's removal from the register survives removal (Article 280). The insolvency law adds criminal offences: continuing in business or exercising managerial power knowing that a practitioner has been appointed is punishable by six months to one year's imprisonment and a fine of RWF 1,000,000 to RWF 2,000,000, or one of these penalties (Article 270); leaving Rwanda to avoid obligations, concealing or removing property, or destroying records during a liquidation is punishable by six months to two years and a fine of RWF 500,000 to RWF 2,000,000 (Articles 123 and 264); and misappropriating or concealing the debtor's property, or fraudulently posing as a creditor, by three to five years and a fine of RWF 3,000,000 to RWF 5,000,000 (Article 269). Directors, the secretary and employees must disclose and deliver the company's property and records (Article 117), the court may examine anyone with knowledge of the company's affairs on oath (Article 122) and issue search and seizure warrants (Article 124), and a liquidator may require information from anyone (Article 115).

Shareholders are generally exposed only to the loss of their investment, but a parent company can be caught by the related-company pooling and contribution orders in Articles 125 and 126, and by the clawback of payments and charges it received in the year before commencement. Practitioners are accountable too: a court may remove one for persistent or serious non-compliance, the Registrar General may then suspend the practitioner for up to five years (Article 234), and actions against a practitioner must be brought within three years after the proceedings end (Article 236).

Cross-border insolvency

Chapter XII adopts a recognition model similar to the UNCITRAL Model Law on Cross-Border Insolvency. A foreign representative appointed in a foreign collective proceeding for reorganisation or liquidation may apply directly to the competent Rwandan court for recognition (Articles 240 and 246), and the application itself causes an automatic stay on the debtor's property (Article 246). The application is supported by a certified copy of the foreign decision and a certificate from the foreign court, or other acceptable evidence, a statement of all known foreign proceedings and, if the court requires, a translation into an official language of Rwanda; legalised documents are presumed authentic and the registered office is presumed to be the centre of main interests (Articles 246 and 247). Recognition is decided as an urgent application, as a foreign main proceeding where the debtor's centre of main interests is in that State, or as a non-main proceeding where it has an establishment there (Article 248).

Recognition of a main proceeding suspends the right to transfer, encumber or dispose of the debtor's assets, but a stay operating against creditors in the foreign proceeding does not apply to creditors who reside or carry on business in Rwanda in respect of property in Rwanda, unless the stay results from proceedings taken in Rwanda (Article 249). Further relief may be granted on application and on recognition (Articles 251 and 252), subject to protection of local creditors (Article 253). Rwandan courts and the Registrar General may cooperate and communicate directly with foreign courts and representatives (Articles 255 to 257); after recognition of a foreign main proceeding, a Rwandan proceeding may be opened only if the debtor has assets in Rwanda, and its effects are confined to those assets (Article 258); recognition of a foreign main proceeding is, absent evidence to the contrary, proof that the debtor is insolvent (Article 261); and a creditor paid in one proceeding may not receive more in another until other creditors of the same rank have caught up (Article 262). Foreign creditors have the same rights as other creditors to commence and take part in Rwandan proceedings, and their claims rank as equivalent Rwandan claims (Article 244). Where a foreign company in liquidation abroad has assets in Rwanda, its local agent must notify the Registrar General, and the liquidator must advertise for creditors before distributing (Articles 118 and 119).