A board or a creditor facing distress in the Gelephu Mindfulness City is working with a borrowed statute and a court system that is still being stood up: GMC applies the Insolvency, Restructuring and Dissolution Act 2018 rather than an insolvency law of its own, and no GMC court has yet published a decision applying it. Basnet Law Pte. Ltd., the first law firm incorporated in the Gelephu Mindfulness City, advises directors, creditors and investors on the applied insolvency framework, on schemes under the Companies Act 2025, and on the solvency rules that govern money leaving a company. This page explains what the published sources say and what they do not.
How we help
- Advising boards of distressed GMC companies on their duties, the solvency tests attached to buybacks and capital reductions, and the exposure of a director who approves a payment knowing the company is not solvent.
- Structuring compromises and arrangements with members or creditors through the court-sanctioned route the Companies Act 2025 provides, and amalgamations.
- Advising creditors and lenders on security, its registration within the statutory window and what the applied statute means in a default.
- Working through the property and trust analysis on which client assets and custodied tokens depend when a custodian fails.
- Advising on winding up, strike-off and dissolution under the applied framework and the Companies Act 2025.
- Mapping the forum and structuring transactions so that recovery does not depend on rules GMC has not yet published.
How insolvency and restructuring law works in GMC, in plain terms
GMC has no insolvency statute of its own. The Application of Laws Act 2024 applies the statutes listed in Schedule A in GMC as amended from time to time and with modifications, and the Insolvency, Restructuring and Dissolution Act 2018 is one of the ten that remain on that list, governing corporate and personal insolvency, restructuring and winding up. The published sources do not set out the modifications in detail, and a change to the parent statute flows through to GMC automatically unless GMC modifies or replaces it. The Companies Act 2025 treats dissolution as happening by strike-off or by court winding up under the applied framework, and insolvency-related liability, including liability for trading while insolvent, is governed by the applied statute.
The Companies Act 2025 supplies the surrounding rules. Directors must at all times act and use reasonable diligence, and the received common law and equity add the general fiduciary duties. Money leaving a company is policed by solvency tests: a buyback may be paid only while the company can pay its debts as they fall due for the following twelve months and its assets are not less than its liabilities including contingent liabilities, and a director who approves a buyback knowing the company is not solvent faces a fine or imprisonment. A capital reduction by special resolution needs a solvency statement from every director, available to creditors for six weeks, during which any creditor may apply to the court to cancel it. A compromise or arrangement between a company and its members or creditors may be sanctioned through a court-ordered meeting, two or more companies may amalgamate, and a charge created by a company must be lodged with the Registrar within 30 days or it is void against the liquidator and any creditor so far as it confers security.
The forum is the untested part. The Royal Charter gives GMC independent judicial authority including final adjudication, but every GMC Act defines the court as the judicial body the Druk Gyalpo designates for the provision in question, and no designation instrument, court rules or reciprocal enforcement statute appears on the official legislation list. Until separate judicial bodies exist, the GMC Authority administers and enforces GMC law. No published GMC judgments exist, so a contested insolvency is reasoned from the case law of the parent jurisdiction, which is persuasive rather than binding. Whether a foreign judgment or award will be recognised in GMC is not addressed in any published source.
Two further points matter for regulated businesses. The Financial Services Act 2025 contains no express ring-fence for tokens held in custody on a custodian's insolvency: its trust mechanism covers client money, and whether client tokens fall outside the estate turns on the property analysis under the received law and on the custody agreement. GFSO may seek injunctions and restitution orders and may ask the court to restrain a person from sending assets out of GMC.
Who this is for
- Boards of GMC companies approaching distress or approving a buyback or capital reduction.
- Lenders and secured creditors taking or enforcing GMC-law security.
- Groups planning a compromise with creditors, a members' scheme or an amalgamation.
- Investors and counterparties assessing how a GMC default would be resolved.
How an engagement runs
- Position paper. We identify the entity's solvency on the statutory tests, the security in place and the creditors and members whose consent any plan needs.
- Options. We compare a consensual restructuring, a court-sanctioned compromise, an amalgamation, a capital reduction or a winding up.
- Forum and law. We confirm which designated body would govern, record the persuasive parent-jurisdiction authority on each point and flag what is untested.
- Documents and approvals. We draft the solvency statements, resolutions, scheme documents or security and lodge the filings in time.
- Execution and recovery. We manage creditor windows, court applications and enforcement steps, structuring for assets reachable where enforcement is settled.
Frequently asked questions
Which insolvency law applies in GMC?
The Insolvency, Restructuring and Dissolution Act 2018, applied in GMC by the Application of Laws Act 2024 with modifications. GMC has not enacted an insolvency statute of its own, and the published sources do not set out the modifications in detail.
Can a GMC company do a scheme of arrangement with its creditors?
The Companies Act 2025 provides for a compromise or arrangement between a company and its members or creditors to be sanctioned through a court-ordered meeting. No designation instrument or court rules have been published, so we treat the procedure as available in statute but untested in practice.
What is a director's exposure if the company pays out while insolvent?
Approving a buyback knowing the company is not solvent carries a fine or imprisonment, a false capital-reduction confirmation is an offence, and solvency statements must be signed by every director. Liability for trading while insolvent is governed by the applied insolvency statute.
Will a foreign judgment or award be enforced in GMC?
The published GMC sources do not answer this. No reciprocal enforcement statute is on the legislation list and none of the applied statutes covers it, so we structure cross-border deals with security and escrow reachable where enforcement rules are settled.
Talk to GMC counsel on the ground
Basnet Law Pte. Ltd. is the first law firm incorporated in the Gelephu Mindfulness City. A short conversation early in a matter usually saves time and cost later. Write to basnet@basnetgmc.com or office@basnetgmc.com with a few lines about your plans, and we will tell you plainly what is needed, how long it takes, and whether we are the right fit.
You may contact Basnet Law at basnet@basnetgmc.com or office@basnetgmc.com for any legal queries related to GMC.
