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Leasing in Morocco: When Judicial Collection Becomes a Tough Puzzle
The recovery of bad debts through the judiciary remains a significant challenge for leasing companies in Morocco. With some struggling clients seemingly “disappearing” and the difficulties in enforcing guarantees, even judicial decisions do not ensure full debt recovery. This situation raises concerns among stakeholders in the sector, who view it as a threat to their economic stability.
Despite the launch of preventive tools such as the “Tadawul” platform dedicated to tracking judicial cases, financing companies face clear challenges: notifying debtors, judicial expertise, asset recovery, and procedures for handling corporate difficulties. The transportation and vehicle leasing sectors are particularly affected, prompting some professionals to suggest using GPS systems to safeguard assets.
The legal framework, especially Book Five of the Commercial Code, complicates matters further. The rights of leasing companies are tied to public interest, the continuity of business operations, and job protection. The independence of judges and their discretionary powers in applying the law force companies to adopt a cautious and organized approach when dealing with collective procedures.
Tax pressure exacerbates the difficulties. Provisions set aside for dealing with bad debts are subject to strict conditions for deductibility, and debts can only be written off after it has been established that recovery through the judiciary is impossible. This combination of legal and tax pressures places leasing companies in a difficult position, where operational and legal risks merge to complicate the management of bad debts.
