Saving Viable Businesses : The Effect of Insolvency Reform

The 2008 financial crisis and consequent rise in corporate insolvencies highlight the clear need for efficient bankruptcy systems to liquidate unviable firms and reorganize viable ones and to do so in a way that maximizes the proceeds for creditors, shareholders, employees, and other stakeholders. This note summarizes the empirical literature on the effect of insolvency reforms on economic and financial activity. Overall, research suggests that effective reforms increase timely repayments, reduce the cost of credit, and lower the rate of liquidation among distressed firms.

Bibliographic Details

Main Author:	Klapper, Leora
Language:	English
Published:	World Bank, Washington, DC 2011-09
Subjects:	ACCOUNTANCY, ACCOUNTS PAYABLE, ALTERNATIVE TO LIQUIDATION, ASSET SALES, BANK LOANS, BANKRUPTCY, BANKRUPTCY ABUSE, BANKRUPTCY CODE, BANKRUPTCY COSTS, BANKRUPTCY FILINGS, BANKRUPTCY INSTITUTE, BANKRUPTCY LAW, BANKRUPTCY LAW REFORM, BANKRUPTCY LAWS, BANKRUPTCY PROCEDURES, BANKRUPTCY PROCEEDINGS, BANKRUPTCY RATES, BANKRUPTCY REFORM, BANKRUPTCY REGIMES, BANKRUPTCY SYSTEM, BANKRUPTCY SYSTEMS, BARRIER, BORROWER, BORROWER BEHAVIOR, BORROWING, BUSINESS BANKRUPTCY, COLLATERAL, COMMERCIAL BANKS, CONSUMER PROTECTION, CORPORATE BANKRUPTCIES, COST OF BANKRUPTCY, COST OF DEBT, CREDIBILITY, CREDIT CARD, CREDIT CARD DEBT, CREDIT CARDS, CREDIT DECISIONS, CREDITOR, CREDITOR PROTECTION, CREDITORS, DEBT, DEBT RECOVERY, DEBT RESTRUCTURING, DEBTOR, DEBTORS, ECONOMICS, EFFECT OF INSOLVENCY, EFFECTIVE INSOLVENCY, ENFORCEMENT MECHANISMS, ESTATE, FAILURE RATE, FAILURE RATES, FINANCIAL CRISES, FINANCIAL CRISIS, FINANCIAL DISTRESS, FORECLOSURE, IMPACT OF DEBT, INCOME, INCOME GROUP, INDIVIDUAL BANKRUPTCY, INSOLVENCY FRAMEWORKS, INSOLVENCY LAWS, INSOLVENCY REFORM, INSOLVENCY REFORMS, INSOLVENCY REGIMES, INSOLVENT, INSOLVENT FIRMS, INSURANCE, INTEREST EXPENSE, INTEREST RATES, INTERNATIONAL DEVELOPMENT, INVESTMENT CLIMATE, JUDICIAL ENFORCEMENT, LEGAL FRAMEWORK, LEGAL REFORM, LENDERS, LEVEL OF CREDIT, LIMITED LIABILITY, LIQUIDATION, LIQUIDATION REORGANIZATION, LIQUIDATIONS, LOAN, LOAN PORTFOLIOS, LOAN REPAYMENT, LONG-TERM DEBT, MINIMUM CAPITAL REQUIREMENTS, MORTGAGE, NONPERFORMING LOANS, PERSONAL BANKRUPTCY, PERSONAL BANKRUPTCY LAWS, PERSONAL LIABILITY, POLITICAL ECONOMY, PRIVATE SECTOR DEVELOPMENT, PUBLIC POLICY, QUALITY OF BANKS, REORGANIZATION, REORGANIZATION PLANS, REORGANIZATION PROCESS, REORGANIZATIONS, REPAYMENT, REPAYMENT RATES, REPAYMENTS, SAVINGS, SUPPLY OF CREDIT, VIABLE BUSINESSES, WORLD DEVELOPMENT INDICATORS,
Online Access:	http://documents.worldbank.org/curated/en/2011/09/16198955/saving-viable-businesses-effect-insolvency-reform https://hdl.handle.net/10986/11056
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