The U.S. Department of State reports in its 2007 Investment Climate statement that bankruptcy and insolvency legislation in Cameroon is a part of its Commercial Code. Cameroon is a member of the Organization to Harmonize Business Laws in Africa (OHADA), which promulgates uniform laws applicable to its member states. As an OHADA member, Cameroon observes the Uniform Act Organizing Collective Proceedings for Wiping off Debts, Sections 2 and 3 of which directly address bankruptcy issues. A 2006 International Monetary Fund (IMF) Financial System Stability Assessment of the Central African Economic and Monetary Community region stated that OHADA's framework for insolvency, which suffers from the complicated nature of OHADA regulations and shortcomings in the national judicial system, should be enhanced. Beyond this information, however, there is insufficient information publicly available as to Cameroon's compliance with the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank.

General Overview

According to the U.S. Department of State's (DoS) 2007 Background Notes, Cameroon is a member of the Economic and Monetary Community of Central Africa (CEMAC). The DoS's 2007 "Investment Climate Statement" adds that "Cameroon's bankruptcy law is an integral part of its commercial law. In case of bankruptcy, negotiable, enforceable guarantee instruments cover creditors." Cameroon is also a member of the Organization to Harmonize Business Laws in Africa (Organization pour l'Harmonization du Droit des Affaires en Afrique, or OHADA), whose website (in French only) discloses that it is committed to promoting the harmonization of business laws throughout its member states. The goal of OHADA, according to its website, is to remedy the uncertainties that characterize business legislation in its member states, in order to improve the regional business environment. Among the types of legislation that fall within OHADA's purview are company law and bankruptcy law.

According to the OHADA website, OHADA was created in 1993 to establish a common legal area within which straightforward, modern, business-oriented legislation ("uniform acts") is developed and disseminated to all member states. These uniform acts are binding in all member states, and take precedence over existing laws on the individual country's books. The OHADA legislation governing bankruptcy and insolvency is the Uniform Act Organizing Collective Proceedings for Wiping off Debts, particularly Section 2, Articles 227 through 229, and Section 3, Articles 234 through 239 of that Act. While a 2006 International Monetary Fund (IMF) Financial System Stability Assessment for the CEMAC region stated that OHADA has yielded some improvements, it nonetheless noted that "the OHADA framework could be enhanced in the areas of secured transactions and collateral as well as enforcement and insolvency procedures" (p. 6). According to the IMF report, "debt collection and insolvency proceedings suffer from the complexity of OHADA mechanisms and governance problems in the national judicial systems" (p. 21).

In a 1996 advisory paper by the law firm of Weissberg, Gaetjens and Ziegenfeuter, Cameroon's bankruptcy and insolvency regime was described as based on two procedures: bankruptcy and judicial liquidation. In the latter case, the debtor may be permitted to continue in business during the bankruptcy process. In the former, bankruptcy is essentially punitive. The goal of each is the satisfaction of creditor claims on the business. There is no recourse to debt cancellation or payment delays, without the agreement of the creditor. Insolvency is brought to the attention of the court by either debtor or creditors. A judge is appointed to oversee the procedure. If the debtor and creditors can agree to a "composition" procedure, this can take one of several forms, according to the Weissberg, et al. paper, including "third-party acquisition of the debtor's assets, a scale-down of debts, a moratorium on repayment, or any combination of these." Whichever form it takes, the composition must be approved by the court, upon which the agreement becomes binding on all creditors. If a composition cannot be agreed upon, or if the debtor fails to live up to its terms, the debtor's assets are liquidated and distributed, pro-rata, to all recognized creditors.

The World Bank's "Doing Business" snapshot series offers an assessment of the time and cost of closing a business in 178 countries. Cost is calculated as a percentage of the insolvent firm's assets, time is expressed in years, and return to creditors is presented as "cents on the dollar" of debt. In Cameroon, the cost of closing a business is, on average, 15%, and the average time taken to conclude proceedings is 3.2 years. Return to creditors averages 25.5 cents on the dollar. This compares to a regional average of 20%, 3.4 years, and 17.1 cents on the dollar. The average across the member states of the Organization for Economic Cooperation and Development is 7.5%, 1.3 years, and 74.1 cents on the dollar.