The Hon. Sarath Kumara, Attorney-at-Law

¶ 01 Hon. Deputy Chairperson of Committees, I consider it a privilege to speak at the Second Reading of the Rescue, Rehabilitation and Insolvency (Corporate and Personal) Bill.

¶ 02 Sri Lanka’s non-performing loan ratio rose from 4.38% in Q4 2021 to 12.7% in Q4 2024, reflecting the economy’s collapse due to prior mismanagement. Both debtors and creditors suffered severely. While the Companies Act No. 7 of 2007 and the 1853 Insolvency Ordinance provide mechanisms, they are no longer adequate. Hence, this Bill is a timely necessity.

¶ 03 Those who drove the economy into crisis bear responsibility; many now sit in this House as the Opposition. This Bill offers a second chance to businesses of all sizes and to individuals—providing comprehensive coverage to all stakeholders. Our prior legal framework largely centred on creditors’ enforcement; we are now rebalancing to create opportunities for revival as well as orderly wind-downs.

¶ 04 We seek to transform a failing economy into one of growth, restoring investor confidence domestically and internationally. Key objectives include: - Prioritizing rehabilitation over mere closure; - Providing procedures for both rescue and liquidation, offering second chances; - Enabling restructuring before bankruptcy; - Protecting jobs by saving viable enterprises; - Enhancing creditors’ recoveries by enabling debtors to regain capacity to pay.

¶ 05 With this reform, alongside broader economic recovery, NPL ratios should decline. We also introduce standstill provisions on repayments where appropriate, relieving the severe pressure previously inflicted, especially through parate enforcement. This opens pathways for entrepreneurs to re-enter economic activity.

¶ 06 We are moving towards genuine rule of law—away from past arbitrary practices. Through such modern legislation, we aim to resolve crises and create special opportunities for the business community. I commend the Bill. Thank you.