Verdicts on the optimization of corporate insolvency legal frameworks for sustainable development in Tanzania and Mauritius

Yusto Lucian Habiye, Rajendra Parsad Gunputh and Sameerchand Pudaruth

International Journal of Law and Management, 2024, vol. 68, issue 2, 276-295

Abstract: PurposeSustainable development necessitates balancing economic growth, social inclusion and environmental protection to meet present needs without compromising future generations. The 17 United Nations Sustainable Development Goals (SDGs) provide a global framework to address these challenges. This study aims to explore how optimizing corporate insolvency legal frameworks in Tanzania and Mauritius can contribute to sustainable development, focusing specifically on the intersection of insolvency law and sustainability.Design/methodology/approachThe study adopts a qualitative research methodology, integrating Creditors’ Bargain Theory and Communitarian Theory to analyze insolvency frameworks. The Creditors’ Bargain Theory emphasizes the importance of creditors’ rights in insolvency proceedings, whereas Communitarian Theory highlights broader societal impacts. The research is based on an extensive literature review of 59 academic sources, legal texts and reports, complemented by primary data collected through surveys involving at least 20 legal experts, insolvency practitioners, academics and researchers from both jurisdictions. Data was analysed to identify key themes, strengths, weaknesses and best practices within the existing legal frameworks of Tanzania and Mauritius.FindingsThe study identifies significant disparities between the insolvency frameworks in Tanzania and Mauritius. Tanzania’s framework is encumbered by outdated laws and high burdens of proof for insolvency claims, while Mauritius has a more streamlined process but contends with the misuse of statutory demands. Both countries require reforms to address preferential claims and improve regulatory oversight of insolvency practitioners. The study highlights the need to prioritize consumer claims, set minimum thresholds for statutory demands and ensure equitable treatment of creditors. It further emphasizes enhancing regulatory frameworks, particularly in Tanzania, where insolvency practitioners operate without comprehensive guidelines, in contrast to Mauritius’s more robust system.Originality/valueThis study offers a unique comparative analysis of how insolvency frameworks in Tanzania and Mauritius can be reformed to align with sustainable development objectives. It provides valuable insights into how legal reforms, including the introduction of penalties and enhancement of practitioner qualifications, can contribute to more sustainable economic practices.

Keywords: Asset value maximization; Creditors’ rights; Economic growth; Insolvency legal frameworks; Mauritius; Sustainable Development Goals (SDGs); Tanzania (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijlmap:ijlma-09-2024-0324

DOI: 10.1108/IJLMA-09-2024-0324

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