Mr Felix Addo, President of Ghana Association of Restructuring and Insolvency Advisors (GARIA), an association that ensures effective and efficient insolvency law, on Wednesday said Ghana needed a restructuring law to help companies grow economically, especially in this time of the global financial crisis.
Restructuring a company means that one put in place certain measures that positions the company to make more profit, while companies that are insolvent means they are near collapse and cannot even pay the salaries of workers, among other necessary expenditure.
Mr. Addo at a forum held by GARIA as part of the organization's week long celebration said the current company law in the country does not allow restructuring, therefore companies that do not do well are mostly liquidated.
The forum, which brought together professionals from the banking, legal, judiciary and accounting sectors also discussed examples in restructuring in other countries and how Ghana could adopt best practices in insolvency and restructuring.
Mr Addo said the company law in Ghana was currently being reviewed and said a draft report was submitted to the previous government, expressing hope that the new government will take it up to ensure that the law was reviewed to the benefit of the larger public.
He said: "A recent survey of banking institutions published by PricewaterhouseCoopers and the Ghana Association of bankers indicated that between 1998 and 2003 the loan reverse of the banks as a ratio of the gross value of the loan increased from 10.7 percent to 15.7 percent."
He further said that in such an environment it was imperative that effective insolvency laws and institutions were established.
"I hope that the new law will encompass some elements of restructuring, since companies that do not do well are usually liquidated without an option of restructuring."
Mr Addo advised companies facing difficulties to contact the GARIA for professional advice and pointed out that a company does not need to face difficulty before it employs a professional service it can do so even when things are not too bad.