Removing obstacles to entrepreneurship
The case study on reforms analyzes prominent regulatory changes implemented by governments since the inception of Doing Business. Among the most common regulatory changes over the past 17 years are simplifying the requirements to start a company, easing tax compliance burdens, increasing access to credit, and ensuring the survival of viable businesses. The case study also discusses the effects of regulatory changes on various dimensions of economic development and investment activity.
Enforcing Contracts and Resolving Insolvency: Training and efficiency in the judicial system
The case study on enforcing contracts and resolving insolvency examines the education and training that judges receive worldwide. It highlights that training can act as an essential conduit for the introduction of new laws, methods and practices to the judiciary and that In an ever-changing business world, judges’ knowledge must be kept current on the rapidly-evolving business regulatory environment. The case study also features specific examples of two judicial systems – Indonesia and the United Arab Emirates – with adequate education and training frameworks in commercial and insolvency matters for judges.
Resolving Insolvency: The challenges of successfully implementing insolvency reforms
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.
Resolving insolvency: Measuring the strength of insolvency laws
Doing Business introduces a new component of the resolving insolvency indicator set this year, the strength of insolvency framework index. This indicator tests whether each economy has adopted internationally recognized good practices in the area of insolvency. The data show that there is a positive correlation between the recovery rate for creditors and the strength of the legal framework for insolvency.
Resolving insolvency: New funding and business survival
New funding provided to a debtor company after the start of insolvency proceedings – known as post-commencement finance - helps businesses in financial distress to recover. Doing Business collects data on specific aspects of insolvency laws and regulations in each economy, including the availability and priority of post-commencement finance. The data show possible connections between the existence of regulations on post-commencement finance and the likelihood of business survival. This case study shows that business rescue is more likely in economies where the law provides for post-commencement finance.
Serbia: Faster, more orderly exit
Serbia was plagued by a bankruptcy process that was susceptible to corruption—including an infamous group known as the “bankruptcy mafia.” Something had to change, especially when winding up a failed Serbian enterprise could take 10 years or more.
Italy: Repaying creditors without imprisoning debtors
In 2003 Italy’s bankruptcy law was over 60 years old—not ideal to keep up with economic transformation. Judges, lawyers, businesses, and creditors all knew that the law needed to change, but the process was slow. Then, in 2003, the wake of the crisis caused by Parmalat’s demise, the Italian government finally shifted focus to implementing structural reforms to enhance Italy’s competitiveness.
Chile: Increasing transparency in insolvency proceedings
Before 2005, the receiver profession in Chile was poorly regulated and vulnerable to corruption. Scandals challenged the public’s faith in the system. To root out corruption, Chile worked to ensure that private receivers were specially trained, licensed, appointed, and paid through a transparent system.
Tunisia: Transition to open markets and an improved insolvency process
As the first country in the Middle East and North Africa (MENA) region to sign a European Union Association Agreement (EUAA) in 1995, Tunisia saw the need to strength its business environment in the face of increased competition from the European Union. Furthermore, Tunisia’s insolvency system needed to be improved as banks and other enterprises were privatized in the opening economy.
Italy: Modernizing Italy’s bankruptcy law
Reforming bankruptcy laws can be difficult for many reasons. In Italy, first of all, attitudes toward bankruptcy made it a difficult subject to generate support for. Secondly, bankruptcy reforms are often complex and lengthy: They require changes not only to the bankruptcy law, but also to other important parts of the legal framework—such as the codes of civil procedures and, in the case of Italy, the penal code. Finally, they require support from those that must implement them. This paper outlines Michele Vietti's experience in leading Italy's Commission for the Reform of the Bankruptcy Law and the lessons he learned from it.