Terms of Reference
STRENGTHENING ARMENIA’S INSOLVENCY AND RESTRUCTURING FRAMEWORK
LEGAL CONSULTANT
1. Background
Armenia introduced a number of amendments to its 2006 Insolvency Law, which came into effect in June 2016. The amendments included a new pre-insolvency reorganisation procedure and a stronger moratorium on creditor enforcement in reorganisation. Nevertheless there is a widely held perception across stakeholder groups that a debtor’s business cannot be reorganised in formal insolvency proceedings and the number of reorganisation cases initiated in Armenia remains very low. There are also weaknesses in the existing system of regulation and supervision of insolvency office holders (“IOHs”) which has led to complaints from insolvency stakeholders.
The Ministry of Justice of the Republic of Armenia (the “MoJ”) has therefore requested the assistance of the EBRD with a general review of the country’s corporate insolvency law framework, with particular focus on corporate reorganisation and strengthening of the supervisory regime for insolvency practitioners. In addition, the MoJ has asked EBRD to help improve the level of key stakeholder knowledge and awareness of the new Armenian insolvency framework. This would be conducted through outreach activities including workshops and written guidance on the new insolvency procedures.
Capacity building for IOHs is essential for successful implementation of the Insolvency Law. Following the 2016 reforms, prospective IOHs are required to pass an entrance examination set by the MoJ. All IOHs are now expected to undertake a minimum of 24 hours of continuing training and the Self-Regulatory Organisation of IOHs (the “SRO”) is responsible for delivering training to its members. From discussions between the EBRD and local stakeholders, the knowledge and perception of insolvency as a tool for reorganisation needs to be strengthened through targeted training of IOHs. The EBRD would thus propose to support the SRO in offering training to IOHs, with a particular emphasis on the overall objectives of insolvency law including reorganisation in insolvency. The scope of such training would be established once there is a clear understanding of further reforms to the Insolvency Law.
The Project will be structured in two parts: (i) the first part comprises assistance to the MoJ with the insolvency framework; and (ii) the second part involves assistance to the SRO on capacity building and training for IOHs and assistance to the MoJ with outreach activities for stakeholders and a written guide for stakeholders to the Armenian insolvency framework.
The EBRD will seek to retain a group/consortium of international and local legal consultants (“Legal Consultant”) with local and international practical experience in corporate restructuring and insolvency to carry out the tasks of the Project.
2. Objective
The overarching objective of the Legal Consultant during Part 1 of this Project is to review and identify weaknesses in the Armenian corporate insolvency framework, with focus on corporate reorganisation and the IOH supervisory and regulatory framework, and assist the MoJ with necessary amendments to the legislation to address key issues. On successful completion of the reforms proposed under Part 1 of the Project, and subject to availability of funding, Part 2 of the Project shall commence. The objectives of Part 2 shall be to assist with capacity building and training for IOHs and to raise stakeholders’ awareness and understanding of the Armenian insolvency framework.
Part 1
Task 1: Legislative Review and Drafting
The main goal of this component is to review and identify weaknesses in the Armenian corporate insolvency framework and address such weaknesses through technical cooperation support. The activities to be undertaken include:
(i) a preliminary review of the corporate insolvency framework in Armenia, focused on corporate reorganisation, analysing any legislative and/or implementation weaknesses identified in the insolvency framework, and setting out clear recommendations for addressing the identified impediments (“Insolvency Law Review”). The Insolvency Law Review should benchmark the current corporate restructuring and insolvency framework in Armenia against international best practices and with reference to practical cases and examples;
(ii) presentation of the Insolvency Law Review to the MoJ for discussion and consultation; and
(iii) expert assistance to the MoJ to prepare draft amendments to the Insolvency Law to address any major shortcomings identified in the Insolvency Law Review.
Task 2: Assessment of Supervisory and Regulatory Framework for IOHs
The main goal of this component is to conduct an assessment of the supervisory and regulatory framework governing the activities of IOHs in insolvency procedures in Armenia. The activities to be undertaken include:
(i) an assessment of the existing supervisory regime for IOHs (the “IOH Assessment”), which identifies any existing weaknesses and proposes ways in which supervision of IOHs could be strengthened within the existing self-regulatory framework, drawing on the findings of the 2014 EBRD assessment of IOHs in 27 countries of operations;
(ii) presentation of the IOH Assessment to the MoJ for discussion and consultation; and
(iii) expert assistance to the MoJ to prepare draft amendments to the Insolvency Law and/or any ancillary legislation to implement the key recommendations contained in the IOH Assessment.
Part 2
Part 2 of the Project is expected to commence subject to: (i) availability of funding; (ii) satisfactory performance of the Legal Consultant; and (iii) Bank’s needs.
The Bank reserves the right to contract the Legal Consultant for Part 1 only.
Task 1: Capacity building
The main goal of this component is to implement the new insolvency framework successfully in practice by working with the SRO to raise the level of IOH performance and ability to administer the new Insolvency Law, with focus on corporate reorganisation. The activities to be undertaken include:
(i) preparation of a training methodology and programme, with reference to the issues identified in the Insolvency Law review; and
(ii) delivery of a two to three day module to up to three groups of IOHs on selected topics, highlighting relevant changes in the insolvency framework and focusing on how to achieve the overall objectives of insolvency law.
Task 2: Guidance and Outreach
The main goal of this component is to raise stakeholder awareness and understanding of the new corporate insolvency law framework. The activities to be undertaken include:
(i) drafting of a guide for insolvency stakeholders on the key provisions of the Insolvency Law; and
(ii) two to three workshops or, alternatively, one workshop and a conference on the overall objectives and purpose of insolvency and restructuring for public and private sector participants.
3. Implementation Arrangements
Implementation shall be required to commence as soon as possible. The expected maximum duration of the assignment is 18 months. The Legal Consultant will be supervised by the designated EBRD Operation Leader. The Legal Consultant will be required to update the EBRD Operation Leader and Project team on a regular basis on the Project’s progress. The EBRD will facilitate access by the Legal Consultant to local stakeholders and will endeavour to provide the Legal Consultant with any relevant information and/or documents that are not otherwise publicly available. Relevant government ministries shall be consulted as appropriate during the course of this project, since their support will be essential for future implementation of any recommendations.
4. Deliverables and Timing
During Part 1 of the Project, the Legal Consultant shall:
(a) prepare the Insolvency Law Review and IOH Assessment and provide it to the Operation Leader within 3 (three) months from the commencement of the Project;
(b) present the findings of the Insolvency Law Review and IOH Assessment to the key stakeholders in Armenia within 4 (four) months from the commencement of the Project; and
(c) draft the necessary amendments to the legislation in Armenia to implement the recommendations contained in the Insolvency Law Review and the IOH Assessment and provide it to the Operation Leader within 6 (six) months from the commencement of the Project. This deliverable will entail liaising and coordinating efforts with the relevant government bodies and stakeholders in Armenia to build an understanding and consensus over the reform and introduce the necessary legal amendments.
During Part 2 of the Project, the Legal Consultant shall:
(a) prepare the training methodology and programme, with reference to the issues identified in the Insolvency Law Review and discussions with the SRO and provide it to the Operation Leader within 6 (six) weeks from the commencement of Part 2 of the Project;
(b) prepare the guidance for insolvency stakeholders on key provisions of the Insolvency Law and provide it to the Operation Leader within 2 (two) months from the commencement of Part 2 of the Project;
(c) deliver two to three day module to up to three groups of IOHs on selected topics, within 3 (three) months from the commencement of Part 2 of the Project; and
(d) organise two to three workshops or, alternatively, one workshop and a conference on the overall objectives and purpose of insolvency and restructuring for public and private sector participants, within 5 (five) months from the commencement of Part 2 of the Project.
The Legal Consultant shall receive payment in instalments (to be agreed) upon satisfactory completion of the above tasks.
All written deliverables shall be in English and Armenian. Deliverables shall be provided in paper and electronic form. No deliverable will be considered as final before being approved by the Operation Leader as being of an acceptable quality.
The Consultant shall include the following wording in the final version of written deliverables:
“This [document] has been produced releasing the EBRD from any liability relative to the selection of the Consultant and the quality of the Consultant’s work. In no respect shall EBRD incur any liability for any loss, cost, damage or liability related to the EBRD’s role in selecting, engaging or monitoring the Consultant or as a consequence of using or relying upon the services of the Consultant.
EBRD makes no representation or warranty, express or implied, as to the accuracy or completeness of the information set forth in this [document]. EBRD has not independently verified any of the information contained in the [document] and EBRD accepts no liability whatsoever for any of the information contained in the [document] has or for any misstatement or omission therein. This [document] remains the property of EBRD”.
Detailed requirements not set out in these Terms of Reference with regards to the content, language, format and timing for submission of the deliverables for the Project shall be agreed between the Bank and the Consultant prior to commencement of the Project.
ANNEX 1 – FINANCIAL PROPOSAL
1. Financial Submission Form
[Location, Date]
To: European Bank for Reconstruction & Development
One Exchange Square
London EC2A 2JN
United Kingdom
Subject: [project_name]
Dear Sirs:
Herewith is our Financial Proposal in the sum of [amount in words and figures].
This amount is (exclusive of VAT),
A. (We determined that the services are exempted from indirect taxes/VAT. The basis of exemption is set out in …(provide evidence)….as attached, OR
B. (We determined that the services are subject to indirect taxes/VAT. The basis of the determination for indirect taxes/VAT being chargeable on the services is set out in …(provide evidence)…as attached;
Indirect taxes/VAT have been estimated at [amount in words and figures]. If this determination is verified by the Bank, it is intended that the Bank is responsible for paying and recovering the indirect taxes/VAT associated with the services.
which we have estimated at [amount in words and figures]
______
[authorised signature(s)]
Name and Title of Signatory
Name of Firm
Address
2. Breakdown of Costs (exclusive of VAT)
DIRECT EXPENSES
1. Fees (Remuneration):
Name of Experts / Job Titles / WorkingPeriod / In the
Field / In Home
Office / Total
Period / Expert
Rate / Total
Total Fees
2. Per Diem Allowance:
Place / Number / Rate Period / Per Diem / TotalTotal Per Diem
REIMBURSABLE EXPENSES*
3. Air Travel: (Full Economy Class or Equivalent)
Routing / Air Fare / No. of Flights / TotalTotal Air Travel
4. Local Travel: (Travel from home to departure airport and
return, and reasonable local travel when abroad)
Journey / Cost / No. of Journeys / TotalTotal Local Travel
5. Miscellaneous
Item / Description, number etc / TotalVisas
Interpretation and Translation
Reports
Communications
Equipment Purchase
Accommodation (not listed in Per Diem) for long term experts
Other Miscellaneous Expenses (to be specified)
Miscellaneous Total
6. Contingencies: (utilisation only after prior approval in writing by the Bank) / [contingency]
Total Amount of Financial Proposal
* May include indirect taxes, such as VAT which are not otherwise recoverable by the Consultant.