Lebanon lacks any modern legislation specifically covering bankruptcy and insolvency. Insolvency related issues are dealt with under the Commercial Code and the Penal Code, according to a 2005 report by the Institut de la Mediterranee (Institute of the Mediterranean) of France & the Economic Research Forum of Egypt. However, the government of Lebanon considers it a priority to reform insolvency procedures, and in 2006, the Ministry of Finance reported that, with the support of the European Union, a new draft law which is "in line with the latest international guidelines" was, at the time of the report, awaiting final review and approval. However, no further information as to Lebanon's compliance with the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank is publicly available.

General Overview

According to a 2005 report by the Institut de la Mediterranee (Institute of the Mediterranean) of France & the Economic Research Forum of Egypt, Lebanon lacks any modern legislation specifically covering bankruptcy and insolvency. Insolvency issues are dealt with under Articles 459 through 668 of the Commercial Code and elements of the Penal Code. In a speech delivered at the launch of the Association of Directors and Business Owners Code of Business Ethics in Beirut in April, 2004, Dr. Nasser Saidi announced that the Lebanese government planned to reform and modernize its laws on insolvency and bankruptcy. The work was being undertaken by the Lebanese Transparency Association's Task Force on Corporate Governance for Lebanon. This effort is hoped to bring Lebanon's insolvency framework into alignment with internationally recognized standards. In 2006, the Ministry of Finance (MoF) stated in its "Key Fiscal, Debt, Monetary, Trade, and Market Reforms: 2006" report that this work, which received European Union funding, had resulted in a new draft law which aims to "provide the appropriate and predictable legal framework to create an innovative and dynamic economy through continuously rejuvenating the market; reducing the number of failing enterprises by resolving financial difficulties at an early stage; and enabling non-viable enterprises to exit smoothly without being hindered by the stigma of failure; in addition to providing bankrupts with the opportunity of a fresh restart" (p. 18). According to the MoF, the draft law, "in line with the latest international guidelines" (p. 18), was, at the time of the report, awaiting final review and approval.

According to the World Bank's "Doing Business Snapshot" of Lebanon's performance on three measures of closing a business (cost, time of procedure, and return to creditors), Lebanon was in 2007 ranked as achieving an average cost (measured in a percentage of the settled estate) of 22%, an average time (in years) of 4.0, and an average return for creditors (measured in cents on the dollar) of $0.191. This compares to a regional average of 13.7%, 3.2 years, and $0.298 cents on the dollar. For the Organisation for Economic Co-operation and Development (OECD) member states as a whole, the averages are 7.5%, 1.3 years, and $0.741.