Introduction
Distressed companies in Cameroon and the wider OHADA zone are governed by the OHADA Uniform Act on Collective Insolvency Proceedings (Acte uniforme portant organisation des procédures collectives d’apurement du passif, AUPC), revised in 2015 to modernise the region’s restructuring and insolvency toolkit. The Act applies to traders, and its procedures are conducted before the competent courts of the member state where the debtor has its principal establishment.
Prevention — acting before distress
The AUPC’s distinctive feature is its preventive tier. Companies experiencing difficulty — before payment default — can institute internal prevention procedures and, with the court, appoint a conciliator to facilitate negotiated agreements with principal creditors. Agreements reached in these procedures can be homologated by the court, giving them binding effect. For groups and family businesses, the preventive tier is often where the most value is preserved.
Safeguard and reorganisation
Where the debtor faces imminent but not yet irreversible difficulty, the safeguard procedure (procédure de sauvegarde) allows management to remain in control while a restructuring plan is prepared and voted on by creditors organised into classes. Once the debtor has stopped payments, judicial reorganisation (redressement judiciaire) applies, with a court-appointed syndic administering the process. Both procedures can end in an approved plan rescheduling or restructuring debts.
Liquidation and creditor strategy
Where recovery is not viable, judicial liquidation follows, with realisation of assets and distribution under the Act’s ranking rules. Secured creditors holding perfected OHADA security are in a materially stronger position — which is why security taken at documentation stage (see our guide to the Uniform Act on Security Interests) matters so much to recovery outcomes.
Conclusion
The AUPC rewards early engagement: the earlier a distressed company enters the framework, the more tools are available to management and creditors. ALPs advises borrowers, creditors and investors on prevention, restructuring and enforcement under the AUPC in Cameroon.
