Key Features of the New Law
- Who Is Covered?
- The law applies to micro and small enterprises, natural or legal persons operating in Rwanda, whose turnover and debt levels will be defined by ministerial order. It covers anticipated financial distress, insolvency of the debtor, simplified reorganisation and liquidation, and cross-border insolvency. Certain debtors and “excluded assets,” such as a family home or essential business tools, remain outside its scope.
- Two Core Procedures
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Simplified Reorganisation restores the financial health of a distressed business under a reorganisation plan.
Simplified Liquidation handles the sale and distribution of assets when recovery is no longer possible. - Speed and Efficiency
- The law is built for efficiency with short deadlines of eight working days for individual notifications and fifteen for public notices. It requires reduced formalities with minimal paperwork and default procedures unless objections arise. The process is digital, using electronic platforms, communication, and standard forms to cut cost and time. Silence within the prescribed period counts as consent.
- Registrar General at the Helm
- The Registrar General (RG) has exclusive authority to start, supervise, and control the process. Key powers include overseeing and preserving assets, verifying and admitting creditor claims, filing court actions to void fraudulent or undervalued transactions, and appointing independent professionals to assist. Appeals can be made to an Appeals Committee within eight working days, and thereafter to a competent court, but neither step halts the ongoing process.
- Commencement & Automatic Stay
- Proceedings can be initiated by the debtor, shareholders or directors, creditors, or regulators. Once commenced, a stay of proceedings automatically suspends lawsuits and enforcement actions, prevents termination of contracts or disposal of key assets, and stops penalties and interest from accruing, with limited exceptions for secured creditors.
- Financing & Priority of Payments
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During reorganisation, debtors may raise Business Rescue Finance (BRF) secured against unencumbered assets. BRF claims take priority over unsecured debts and maintain that priority if the case converts to liquidation. In liquidation, proceeds follow a strict order:
- Insolvency estate expenses
- Secured creditors
- Retention-right holders
- Funeral or testamentary costs if applicable
- Employee claims
- Social security dues
- Government taxes
- Business rescue finance
- Unsecured creditors
- Discharge & Termination
- Debtors can be discharged when proceedings close, no more than twice in a lifetime. For natural persons, discharge typically follows five years, but may be reduced to six months or extended to ten years based on conduct. Certain debts such as family support, court fines, and government student loans cannot be discharged.
- Sanctions & Penalties
- The law introduces tough penalties to deter abuse. Administrative penalties include warnings or fines of RWF 500,000 to 1,000,000 for fraudulent claims or obstruction. Criminal penalties for debtors include up to one year imprisonment and fines up to RWF 2,000,000 for hiding assets, destroying records, or taking on undisclosed new debt. Criminal penalties for any person include up to five years imprisonment and fines up to RWF 7,000,000 for misappropriating or fraudulently claiming debtor assets.
Why It Matters
For Rwanda’s entrepreneurs, this law offers clarity, speed, and second chances. Micro and small enterprises, the backbone of the economy, now have a realistic path to restructure or exit without the prohibitive costs and delays of traditional bankruptcy. Business owners, creditors, and legal practitioners should familiarise themselves with these provisions well before the law takes effect in early 2026.