A Creditor’s Gamble? An Appraisal of Creditor Protection in Liquidation Proceedings in Ghana

This paper assesses Ghana’s insolvency regime and the extent to which it protect creditors during winding-up. It argues that Ghana’s insolvency framework constitutes a calculated gamble on the final distributional outcome in liquidation proceedings, deprioritising creditors’ interests. For secured creditors, the traditional efficacy of security is less evident under the Corporate Insolvency and Restructuring Act 2020 (Act 1015), as the Act not only diminishes the potential value of the security but fundamentally alters its legal character. Likewise, for unsecured creditors, the pari passu distribution regime under Act 1015 is less promising. Indeed, pre-liquidation procedures such as the statutory moratorium in administration and the implementation of restructuring agreements do not merely delay enforcement; they actively subordinate pre-insolvency private bargains to a new, collective, public policy objective. These mechanisms, therefore, can actively diminish the asset pool and disrupt the established hierarchy of claims that would otherwise prevail in a straightforward winding-up. Further, the value of the distributable estate is diminished through the erosion of priority by statutory preferential debts, the existence of quasi-security interests, and the pre-liquidation conduct of directors, whose actions in the “twilight zone” of insolvency can dissipate assets through voidable transactions. Ultimately, the paper contends that Act 1015 fails to strike a fair balance between its competing policy objectives and creditor protection, thus disproportionately shifting the economic risk of corporate failure onto creditors, thereby making their recovery in liquidation an increasingly precarious and unpredictable venture.