Resolving Insolvency: The challenges of successfully implementing insolvency reforms
Author: Doing Business
Publication: Doing Business 2018
Doing Business tracks insolvency reforms across 190 economies. Since Doing Business 2005, 110 economies have introduced 205 changes aimed at facilitating the efficient resolution of corporate insolvency. In 2013/14, the resolving insolvency indicators started measuring whether insolvency laws complied with certain international standards, including access to reorganization proceedings for debtors and creditors. Since then, the most common type of reform recorded by the indicators has been the introduction of or improvements to reorganization procedures. Many factors, however, can make it challenging to implement insolvency reforms.
This case study uses the specific examples of France, Slovenia and Thailand to illustrate successful insolvency reforms that can inspire similar efforts elsewhere. These countries introduced and improved restructuring procedures and business reorganization has become an increasingly utilized option for viable firms in financial distress.
- France introduced a restructuring procedure—the procédure de sauvegarde (safeguard procedure)—in 2005 to enable debtors to prevent economic and financial difficulties. Today, the procedure facilitates business survival in three out of four initiated cases.
- Slovenia brought its legal framework closer to international good practices in 2013. Greater access to the reorganization procedures for creditors has been accompanied by an impressive survival rate of viable companies.
- Although it took some time for stakeholders in Thailand to get accustomed to reorganization procedures, filings at the Central Bankruptcy Court increased steadily from 1% of total insolvency cases in 2011 to almost 9% in 2016.