Abstract:
The New Commercial Code (hereinafter NCC) of Ethiopia draws the objectives of bankruptcy
proceedings to arrange liquidation of the debtor's business that maximizes the values of the
assets available for the creditors. NCC has established the trustee and incorporated the enabling
bankruptcy provisions to achieve these objectives. Once a bankruptcy case is filed, bankruptcy
provisions deprive the debtor of pursuing any business activity. It automatically creates an estate
with a legal personality different from the debtor. An automatic stay ends all transactions
undertaken before filing a bankruptcy case. An ipso facto clause that accelerates, terminates or
withholds the performance is revoked. The legal and judicial responsibility of the debtor is
delegated to the trustee. Consistent with the NCC's bankruptcy provisions, a trustee is
empowered to terminate ongoing financial leases. Despite these objectives and the bankruptcy
provisions, the Capital Goods Lease Business (hereinafter CGLB) requires the "full payout, non cancelability and forces the trustee to remain performing financial leases. This indicated that the
bankruptcy provisions of the NCC are inconsistent with the functional nature and bankruptcy
provisions of the CGLB. Thus, this thesis analyzed the challenges and prospects of applying
bankruptcy proceedings of the NCC to financial leases. Qualitative research methods and data
collection tools were used to understand the practical aspects. The finding of this research has
revealed that functionally the bankruptcy provisions of NCC are incompatible with the full
payout, non-cancelable, and responsibility of the trustee to continue performing the financial
leases of the CGLB. The practitioners' inconsistency and awareness constraints rendered the
application of bankruptcy proceedings of the NCC to financial leases business insufficient.
Owing to these, the thesis recommended the inconsistency of the bankruptcy provisions in the
NCC and the CGLB proclamation for amendments.
