Introduction

In recent years, Ghana has witnessed significant economic growth driven by key sectors including agriculture, energy and mining sectors. However, like many developing economies, the nation faces persistent challenges such as unstable commodity prices, mounting debt levels, and global economic uncertainties, which have worsened financial distress among businesses. These pressures have highlighted the urgent need for robust insolvency management and business recovery mechanisms.

A transformative development in this regard came with Ghana’s passage of the Corporate Insolvency & Restructuring Act, 2020 (Act 1015) (“the Act”), which introduced a modern framework for aiding financially distressed companies. The Act sets out clear conditions for placing companies into administration, such as when a company becomes financially distressed (i.e. insolvent), or has the likelihood of becoming insolvent. It also outlines the key responsibilities of administrators who work to stabilize the company and restructuring officers who create recovery strategies. Both roles must be filled by qualified insolvency practitioners (“IPs”). For a more detailed explanation on corporate restructuring and other related issues, kindly refer to our previous articles on Corporate Restructuring and The Role of the Board in Ghana and The Key Role of Due Diligence in Corporate Restructuring Transactions in Ghana.

The Role of IPs

IPs play a key role in Ghana’s corporate recovery ecosystem by helping distressed businesses recover or close in a more structured manner. They protect jobs, repay creditors, and keep businesses running, which builds trust in the business environment and supports economic growth. Under Ghana’s new insolvency laws, IPs serve as administrators or restructuring officers, leading recovery efforts or managing closures when needed. For stakeholders like creditors, lenders, and financial experts, understanding this system is crucial and including a qualified IP early in the process will help to determine whether a business will survive or fail.

This article provides a comprehensive examination of:

1. Understanding Insolvency.

2. Who qualifies as an IP under the Act?

3. Challenges facing IPs.

4. Emerging opportunities for professionals in this field.

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Understanding Insolvency 

Insolvency occurs when a business cannot pay its debts on time or when its liabilities exceed its assets, which means that the business owes more than it can pay. This can arise due to poor financial management, changes in the business environment, or global economic challenges. When a company faces insolvency, it often turns to corporate restructuring as a solution.

Corporate restructuring involves making significant changes to the company’s financial and operational structure to address financial difficulties as discussed in our previous article on the Practical Steps In A Corporate Restructuring Transaction in Ghana. It involves renegotiating debt, improving operations, and reorganizing the business to reduce risk, enhance performance, and restore financial stability. In such situations, IPs play a critical role.

Ghana has taken significant steps to establish a legal framework for insolvency. The Act is the primary piece of legislation governing insolvency proceedings in Ghana. It aims to provide a clear structure for insolvency management, corporate rehabilitation, and liquidation processes. The Act allows businesses to either enter into formal insolvency processes such as liquidation or voluntary arrangements or seek informal restructuring through negotiations with creditors.

Additionally, the Companies Act, 2019 (“Act 992”) provides relevant provisions concerning corporate governance and how companies in distress should proceed with formal insolvency processes.

Who Is an IP?

An IP means a receiver or manager under Act 992, an administrator or restructuring officer or a liquidator under the Act, a trustee in bankruptcy under the Insolvency Act, 2006 (Act 708).

An IP can simply be referred to as a person who is qualified and licensed to act in matters relating to insolvency, including the restructuring, administration, or winding up of a company’s or an individual’s affairs when they are unable to pay their debts. IPs are often accountants, lawyers, or experts in corporate restructuring and debt management. They provide specialized services to businesses facing insolvency or financial distress. They assess financial situations, advise on recovery options, manage restructuring, and ensure legal compliance. By working closely with the company, IPs help navigate the complexities of insolvency and guide the business toward a sustainable recovery.

Qualification Requirement of an IP

To qualify as an IP in Ghana, an individual must be a chartered accountant, a lawyer, or a banker in good standing with their respective professional bodies. Additionally, the person must be certified by the Registrar of Companies, hold a professional indemnity insurance, and be qualified to be a company director.

It is a criminal offence to act as an IP without the required qualifications. Anyone found guilty can be fined between Six Thousand Ghana Cedis (GHC 6000.00) and Twelve Thousand Ghana Cedis (GHC 12,000.00) or to a term of imprisonment of not less than two(2) years and not more than five (5)years or both. However, any actions taken by such unqualified persons remain valid unless a court decides otherwise.

In accordance with the Act, Ghana Association of Restructuring and Insolvency Advisors (GARIA), now Chartered Institute of Restructuring and Insolvency Practitioners, Ghana (“CIRIP”) has been established to assist the Registrar of Companies (“the Registrar”) with the training and licensing of IP.  The objectives of CIRIP includes the following:

• Lead discussions on business turnarounds and insolvencies;
• Encourage restructuring of distressed entities including state-owned enterprises and other business establishments;
• Promote mutual exchanges of opinions and information by practitioners who are engaged in research and practice in the field of insolvency or business recovery;
• Provide a forum for practitioners engaged in business recovery and insolvency practice;
• Promote law reforms in effective business recovery measures and insolvency; and
• Promote international cooperation with respect to insolvency or business recovery and related cross-border matters.

It is important to point out that a person may qualify as an IP but will be ineligible for appointment as an administrator of a company if they have, within certain capacities, a prior relationship with the company or its associates. These capacities include being a creditor, a shareholder within the past two(2) years, a director, an auditor, or a receiver of the company or any of its associated companies.

Regulation of IPs

In order to ensure IPs act with due care and professionalism, the Act empowers the Registrar to:

• Issue guidelines in respect of fees to be paid by IPs;
• Provide reporting procedures;
• Review the conduct and performance of an IP regularly;
• To train and license existing IPs with the assistance of CIRIP;
• Apply to the court order an IP from practicing if found guilty for misconduct;
• Subject to giving the IP a hearing, take action against an IP who has been suspended or removed from the relevant professional body; and
• Maintain a register of IPs.

To help the Registrar review how IPs behave, anyone who reports the actions of an administrator is protected from legal consequences. This encourages people to speak up about misconduct. These rules help make sure IPs act with care, honesty, and professionalism in their roles.

Emerging Opportunities in Ghana’s Insolvency Practice

With the Act’s focus on business rescue, there is an increasing demand for qualified IPs to assist in debt restructuring, business turnarounds, and cross-border insolvency cases. Chartered accountants, lawyers, and bankers have the opportunity to advance their careers by obtaining certifications as IPs through CIRIP and the Registrar. This is a key opportunity for professionals to position themselves at the forefront of business recovery efforts in Ghana.

Banks and financial institutions are increasingly relying on IPs to manage credit risk, handle non-performing loans, and acquire distressed assets. This trend is creating roles for insolvency consultants, forensic accountants, and legal advisors. In addition, new businesses are emerging in the advisory space, including digital debt recovery platforms and specialized training centers for the next generation of professionals.

Challenges Facing IPs

Despite the growing opportunities, IPs in Ghana face several obstacles that affect their ability to perform their roles effectively:

1. Low Public Awareness

Many businesses in Ghana remain unaware of the benefits of formal insolvency processes and the vital role that IPs play in these procedures. This lack of awareness often leads to reluctance in entering insolvency proceedings early enough, resulting in the eventual liquidation of businesses that could have been rescued through restructuring or other recovery methods.

2. Inadequate Infrastructure and Support

IPs often struggle with insufficient infrastructure and administrative support in Ghana. The insolvency process can be prolonged, and the lack of a streamlined system can delay recovery or liquidation proceedings, making it harder for businesses to bounce back or transition smoothly.

3. Cultural and Economic Factors

There is still a cultural stigma associated with insolvency and bankruptcy in Ghana, which often discourages businesses from pursuing formal insolvency processes.

The Way Forward

While these challenges exist, the path forward is filled with opportunities. With the right certifications and skills in business restructuring, professionals will play a pivotal role in Ghana’s economic recovery. By raising awareness, improving infrastructure, strengthening the legal and regulatory framework, and addressing cultural and economic factors, IPs can overcome these barriers and help businesses navigate the complexities of financial distress.

As Ghana continues to strengthen its insolvency framework, IPs will be at the heart of business recovery and economic stability. For those prepared to meet these challenges head-on, the emerging insolvency practice in Ghana promises a wealth of career opportunities and the chance to make a significant impact on the country’s economic future.

Conclusion

The role of IPs in Ghana’s business recovery landscape is indispensable, particularly under the progressive framework established by the Act. As licensed experts, IPs guide distressed companies

through restructuring, operational overhauls, or orderly closures, preserving jobs, and economic stability. Their work bridges legal, financial, and operational gaps, ensuring compliance with evolving regulations while mitigating systemic risks.

Despite the progress made, challenges such as low public awareness, limited infrastructure, and the stigma around insolvency remain. As CIRIP evolves into a statutory regulator, the profession is set to become more standardized and influential.

The critical role of IPs in rescuing viable companies while protecting the interests of creditors enhances investor confidence and contributes to sustainable economic growth. With continued improvements to the insolvency system, distressed businesses will have the support they need to recover or transition, boosting the overall stability and strength of the economy.

By: Nana Ekua Quansar & Ama Anima Konadu

Pupils

VINT & Aletheia Attorneys & Consultants

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