ABSTRACT
The laws of a country must reflect the policies it wishes to promote. When a country engages in political, social and economic change, there is a pressing need to modify and reform its legal system to reflect these changes. To attract foreign lenders, it is essential that a country has a stable political, economic and legal environment. Lenders need to be confident that there are no political risks such as sudden nationalisation or confiscation of undertakings. A country aiming to achieve economic development by promoting private investment must secure the rights of creditors. Unless creditors’ rights are recognised and protected, lenders would be compelled to adopt restrictive lending policies. This may lead to high interest rates, and low volumes of lending which will adversely affect the economic growth of a country. A modern insolvency law is essential in a market economy. It provides enterprises that are insolvent with an orderly means of exit from the market.
