Georgia authorized its first large group of insolvency practitioners in September 2021, reaching a milestone in the country’s ongoing insolvency reforms.
Georgia’s new insolvency law aims at efficiently recycling assets back to productive use and restoring viable businesses to financial health through business rescue in a timely manner.
It should play a major role in Georgia’s economic recovery as the country grapples with the pandemic.
The role of insolvency practitioners is to help businesses take full advantage of all the instruments offered by the new law.
“The development of this profession helps businesses receive the best possible option from the process of recovery/insolvency,” stated Tamar Buadze, USAID’s Economic Governance Program Component Lead overseeing the insolvency reform activities.
Insolvency is not a completely new profession for Georgia. Prior to the new law, USAID supported a group of leading practitioners to organize and establish a new association, Business Rehabilitation Insolvency Practitioners Association (BRIPA).
“BRIPA became a reform champion. The knowledge and expertise of the association’s members were crucial to drafting the new law and advocating for its adoption,” underlined Natalia Beruashvili, Chief of Party of USAID’s Economic Government Program, which supports the reform’s implementation.
Once the law went into force in April 2021, the government worked closely with USAID’s Economic Governance Program to officially introduce the new profession of insolvency practitioners (also known as IPs) through a formal authorization process.
To receive state authorization, insolvency practitioners must be trained, tested and then certified based on a rigorous interview process. Insolvency cases are then assigned to the IPs based on their level of experience and specialization.
USAID’s Economic Governance Program created the training curriculum for the first group of candidates and developed guidance documents for the interview process with the National Enforcement Bureau, the government body tasked with authorizing the cadre.
“The lack of an accredited cadre of insolvency practitioners was identified as a critical obstacle to a successful insolvency reform in an assessment the Economic Governance Program conducted last year. We were pleased to be able to provide expertise and guidance for the Georgian Government for the first round of insolvency practitioners’ training and accreditation,” noted Beruashvili.
The first round of training took place in June and, in September, 18 of them passed the authorization interviews and received government certification. As of today, Georgia has 23 accredited IPs.
Chairman of the National Enforcement Bureau Erekle Ghvinianidze said the selected practitioners have all the skills and experience they need to establish high standards for the profession. “The new insolvency practitioners will be able to gain public trust and continue the insolvency system reform successfully,” he said.
One of the new authorized practitioners, Nino Kochiashvili, underlined the role of insolvency practitioners in the reform.
“Insolvency practitioners play a significant role in establishing an effective insolvency system and I am happy to be part of this important process, together with my colleagues,” she said.
Eighteen out of the 23 new IPs are members of BRIPA. The association won a grant from USAID’s Economic Governance Program to strengthen the capacity and skills of IPs through an international-standard training program.
In addition to training more insolvency practitioners, BRIPA is monitoring how cases are handled under the new law and is planning to create a hotline for businesses to field questions about the process and help them determine if they need an insolvency practitioner. The association is also working to raise businesses’ awareness about the reform.
“Establishing the IP professional standards based on the leading practices in the industry will safeguard the professionalism of cadre and the ease of the process for business recovery/bankruptcy,” Nana Amisulashvili, the head of BRIPA.
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