Streamline Merger, Bankruptcy and Liquidation Procedures of SOEs

Project Description:

The objective of this consultancy was to support the LEPL National Agency of State Property (NASP) at the Ministry of Economy and Sustainable Development. This assistance entailed to analyze the legal and procedural issues affecting state-owned enterprises’ mergers, liquidation and bankruptcy and develop detailed recommendations for streamlining and simplifying these processes.

As a result of the consultancy, PMCG provided:

• Outline of the current bankruptcy and liquidation procedures at NASP
• Policy framework and procedures for streamlining and simplifying SOE merger, liquidation and bankruptcy processes
• Recommendation on determining non-operational SOEs disposal

PMCG provided the following services:

• Analyze legislation regulating SOE merger and acquisition, liquidation and bankruptcy processes
• Review internal processes and policies that NASP needs to undergo for SOE reorganization, liquidation and bankruptcy
• Clearly identify and describe the gaps in above-mentioned legislation or processes hindering SOEs merger, liquidation and bankruptcy
• Recommend a comprehensive set of actions that the NASP and MoESD must take to significantly reduce or eliminate the identified gaps
• Review existing data on non-operational SOEs’ financial and legal conditions and develop initial recommendations for determining whether these SOEs should be liquidated, bankrupted or merged

As a result of the PMCG’s recommendations and on-the-job consultancy of more than 50 cases were solved in a short period of time that significantly facilitated the effective operation of NASP.

Background information:

During the project implementation, under the leadership of the NASP more than 600 state-owned (50% share and more) enterprises existed. The majority of them were unprofitable. Complicated and prolonged bankruptcy and liquidation procedures caused difficulties to NASP in dealing with unprofitable state-owned enterprises. Their existence, on the one hand, led to ineffective disposal of state property and on the other hand their management and maintenance required spending of unreasonable additional resources from the state, which was not compensated.

Follow the links below for related materials:
Pension Development Project through the USAID Supported Economic Prosperity Initiative in Georgia (EPI)
Economic Prosperity Initiative (EPI)