LAHORE - The move to steam-roll a new so-called corporate rehabilitation law that is meant to provide defaulters a judicially enforceable right to claim bank loan, tax, utility bill and workers dues write-offs is afoot again. This is a plan that will benefit only the blue-eyed large defaulters, those with unpaid claims in excess of fifty million rupees. The rest of the petty mortals, small businesses in distress, are to remain exactly where they are in distress. This process had run into a snag a few weeks ago when Zubyr Soomro, formerly President United Bank and Country Head Citibank and a member of the committee set up by the federal government to examine the draft law that is a download of the highly contentious Chapter 11 of the US Bankruptcy Code, had submitted a dissenting note criticizing the draft law as inappropriate for Pakistan. It may be noted that the US Chapter 11 has been repeatedly rejected as model by countries such as Canada, the UK and Australia as inappropriate to those jurisdictions. What is it about Pakistan that makes the US model appropriate? This is a question none of the sponsors of the proposed law want heard. The Securities and Exchange Commission of Pakistan (SECP), the sponsoring agency of the proposed law under the obsessive zeal of its chairman, has now responded by creating a new committee that excludes not only Zubyr Soomro but, despite requests made by the Pakistan Banks Association, lawyers critical of the draft. It is clear that the SECP and the federal government are seeking to create the illusion of discussion and debate while in fact stifling all meaningful examination of the proposed law. This is in the long and woeful tradition of treating the people of this country as mindless apes to he fooled again and then some more. Reports are that the local mission of the World Bank has agreed to bank-roll this farce that includes training periods for SECP personnel and other hand-picked individuals to Latin America. According to well-informed financial circles, several bank heads have received instructions from the highest levels from Islamabad to go along with the proposed law. The State Bank of Pakistan (SBP) continues to stand by in helpless stupor even though the formal nominee of the SBP on the review committee has repeatedly raised concerns, verbally, about the havoc that the proposed law will cause to the recovery not only of bank loans but also other dues such as taxes and utility bills. The said nominee dares not commit to any thing critical in writing. While the proposed corporate rehabilitation law is a spruced up version of the US Chapter flit has been proposed without several features that are vital to its operation in the US. The US has a set of several federal bankruptcy courts in each state that are dedicated to enforcing the bankruptcy code and have gained decades of experience and sophistication in implementing Chapter 11. Appeals against decisions of these courts are heard, the US, by bankruptcy panels. A vital function that these courts perform in the US is the determination of all claims against an entity seeking reorganization. Finally a rehabilitation plan is proposed before the court, mostly by the debtor, and may be approved by the court provided at least one class of creditors signifies support for the plan. The law in the US also provides for the transfer of the shareholding of a company unable to pay its unsecured creditors, such as its employees, to such unpaid creditors. The secured creditors, mostly banks, not paid in full are also allowed to participate in the transfer of shareholding away from the existing shareholders. The proposed law in Pakistan envisages an executive officer, to be called the Official Assignee, as exercising the jurisdiction of not only the banking courts but also the tax tribunals and the civil court for the purpose of determining all claims against a company seeking rehabilitation. Apart from the unconstitutionality of such vesting of judicial authority in an executive officer it is unfathomable how individuals with such wide-ranging expertise will suddenly become available. Any order passed by the Official Assignee will he appeal able before a single judge of the High Court, then a division bench and finally the Supreme Court. It is not understood how this entire process will be completed within six months as claimed by the SECP. The typical length of a Chapter 11 case in the US is three years despite the exclusivity of the jurisdiction exercised by the bankruptcy courts and despite the sophistication gained by them over the decades. The proposed by the SECP also provides for the creation of a technical advisory committee that will examine any reorganization plan proposed after the final determination of claims. The report of this committee will again be appeal able up to the Supreme Court. While the US Chapter 11 requires that a reorganization plan be supported by at least one class of creditors the law proposed for Pakistan has dispensed with this requirement. Consequently, a friendly judge can enforce a plan that requires creditors to make write-offs without the consent of any of the creditors. This is an aspect of the proposed law that even the President of the Banks Association was not aware of when questioned a few days ago. The possibility of the transfer of the shareholding of the company that is unable to pay its unsecured creditors and the role of the secured creditors in this process has never been raised by the SECP in its descriptions of the proposed law. While text permitting the transfer of the shareholding can be said to exist in the draft law there appears no possibility of the banks having a role in this. Most rehabilitation laws around the world, including in the US make special provisions for payment to the workers of the company in distress. The workers are treated as a vulnerable class deserving special treatment with respect to unpaid salaries and pension claims. Not so in the proposed law for Pakistan. Pakistani workers under the proposed scheme of things are at a pedestal below human beings.