Subnational Insolvency : Cross-Country Experiences and Lessons

Subnational insolvency is a reoccurring event in development, as demonstrated by historical and modern episodes of subnational defaults in both developed and developing countries. Insolvency procedures become more important as countries decentralize expenditure, taxation, and borrowing, and broaden subnational credit markets. As the first cross-country survey of procedures to resolve subnational financial distress, this paper has particular relevance for decentralizing countries. The authors explain central features and variations of subnational insolvency mechanisms across countries. They identify judicial, administrative, and hybrid procedures, and show how entry point and political factors drive their design. Like private insolvency law, subnational insolvency procedures predictably allocate default risk, while providing breathing space for orderly debt restructuring and fiscal adjustment. Policymakers' desire to mitigate the tension between creditor rights and the need to maintain essential public services, to strengthen ex ante fiscal rules, and to harden subnational budget constraints are motivations specific to the public sector.

Bibliographic Details

Main Authors:	Liu, Lili, Waibel, Michael
Language:	English
Published:	2008-01
Subjects:	ABSOLUTE PRIORITY RULE, ALLOCATION OF CREDIT, APR, ARREARS, ASSETS, ASSETS FOR DISTRIBUTION, ASSETS IN BANKRUPTCY, BAILOUT, BAILOUTS, BANK FINANCING, BANK LOANS, BANKING SYSTEM, BANKRUPT, BANKRUPTCY, BANKRUPTCY CODE, BANKRUPTCY EXEMPTION, BANKRUPTCY PREVENTION, BANKRUPTCY PROCEDURES, BANKRUPTCY PROCEEDINGS, BANKRUPTCY PROTECTION, BARGAINING POWER, BOND MARKET, BOND MARKETS, BONDHOLDERS, BORROWER, BUDGET CONSTRAINT, BUDGET CONSTRAINTS, CAPITAL MARKET, CAPITAL MARKETS, CHAPTER 13, CLAIM, COLLECTIVE ACTION, COLLECTIVE ACTION PROBLEM, COMMENCEMENT OF BANKRUPTCY, CONTINGENT LIABILITIES, CONTRACT LAWS, CONTRACTUAL RIGHTS, CONTRACTUAL RIGHTS OF CREDITORS, CORPORATE BANKRUPTCY, CORPORATE BANKRUPTCY LAW, CORPORATE INSOLVENCY, CORPORATE INSOLVENCY LAW, COURT JUDGMENT, COURT ORDER, COURT SYSTEM, CREDIT MARKETS, CREDITOR, CREDITOR ACTION, CREDITOR CLAIMS, CREDITOR RIGHTS, CREDITORS, CREDITS, CREDITWORTHINESS, DEBT, DEBT ADJUSTMENT, DEBT ADJUSTMENT LAW, DEBT ADJUSTMENT PLAN, DEBT ADJUSTMENT PROCESS, DEBT ADJUSTMENTS, DEBT COLLECTION, DEBT CRISES, DEBT CRISIS, DEBT FINANCING, DEBT MARKET, DEBT MARKETS, DEBT OBLIGATIONS, DEBT PAYMENT, DEBT PAYMENTS, DEBT RESTRUCTURING, DEBT RESTRUCTURING MECHANISM, DEBT SERVICE, DEBT SERVICES, DEBTOR, DEBTOR-CREDITOR RELATIONSHIP, DEBTORS, DEFAULTS, DEFICIT GRANT, DEPENDENT, DISSOLUTION, DOMESTIC CREDITORS, EMERGENCY LOAN, ESTATE, EVENT OF DEFAULT, FEDERAL BANKRUPTCY, FINANCIAL CRISIS, FINANCIAL DISTRESS, FINANCIAL INDICATORS, FINANCIAL INSTITUTION, FINANCIAL INSTITUTIONS, FINANCIAL MANAGEMENT, FINANCIAL MARKETS, FINANCIAL POSITION, FINANCIAL REHABILITATION, FINANCIAL RELIEF, FINANCIAL REPORTING, FINANCIAL RESOURCES, FINANCIAL RESPONSIBILITY, FINANCIAL STABILITY, FINANCIAL SYSTEM, FINANCIAL TROUBLES, FISCAL DEFICIT, FISCAL DEFICITS, FISCAL DISTRESS, FISCAL REFORMS, FORECLOSURE, FOREIGN CREDITORS, FRAMEWORK FOR INSOLVENCY, GOVERNMENT BANKRUPTCY, GOVERNMENT GUARANTEE, GOVERNMENT GUARANTEES, GROUP OF CREDITORS, HARD BUDGET, INDEBTED, INDIVIDUAL CREDITOR, INDIVIDUAL CREDITORS, INSOLVENCY, INSOLVENCY FRAMEWORK, INSOLVENCY LAW, INSOLVENCY LEGISLATION, INSOLVENCY MECHANISM, INSOLVENCY MECHANISMS, INSOLVENCY PROCEDURE, INSOLVENCY PROCEDURES, INSOLVENCY PROCESS, INSOLVENCY REGULATION, INSOLVENCY STATUTE, INSOLVENCY SYSTEM, INSOLVENCY SYSTEMS, INSOLVENT, INSTITUTIONAL REFORMS, INSURANCE, INTEREST OF CREDITORS, INTEREST RATES, INTERNATIONAL CAPITAL, INTERNATIONAL TRADE LAW, INTRODUCTION OF INSOLVENCY, IRRESPONSIBLE BORROWING, JUDGE, JUDGMENT, JUDGMENTS, JUDICIAL PROCEDURES, JUDICIAL SYSTEM, JUDICIARY, JURISDICTION, LACK OF TRANSPARENCY, LEGAL FRAMEWORK, LEGAL PROCEDURE, LEGAL PROCEDURES, LEGAL REMEDIES, LEGISLATIVE FRAMEWORK, LENDER, LENDERS, LEVERAGE, LIQUIDATION, LIQUIDITY, LITERATURE ON BANKRUPTCY, LOCAL DEBT, LOCAL GOVERNMENT DEBT, MAJORITY OF CREDITORS, MARKET VALUE, MECHANISMS FOR INSOLVENCY, MISMANAGEMENT, MORTGAGES, MUNICIPAL ASSETS, MUNICIPAL BANKRUPTCY, MUNICIPAL BANKRUPTCY CASES, MUNICIPAL BORROWING, MUNICIPAL DEBT, MUNICIPAL DEBT ADJUSTMENT, MUNICIPAL DEFAULT, MUNICIPAL DEFAULTS, MUNICIPAL INSOLVENCY, NATIONAL DEBT, NEGOTIATION, NEGOTIATIONS, OUTSIDE BANKRUPTCY, PARTIAL IMMUNITY, POSSESSION, POSSESSION FINANCING, POTENTIAL LIABILITIES, POWER OF CREDITORS, PRIORITY OF CREDITOR, PRIVATE CREDITORS, PRIVATE INVESTMENTS, PRIVATE LAW, REGULATORY FRAMEWORK, REGULATORY REFORMS, RELIEF FROM CREDITORS, REMEDY, REORGANIZATION, REORGANIZATION PROCEDURES, REPAYMENT, REPAYMENT OF CREDITORS, REPAYMENT OF DEBT, RESTRUCTURING PLAN, RESTRUCTURING PROCESS, RISK OF DEBT, ROLE OF COURTS, SALARY, SATISFACTION OF CREDITOR, SATISFACTION OF CREDITORS, SECURED DEBT, SHORT-TERM DEBTS, SIMILARLY SITUATED CREDITORS, SINGLE DEBT, SOVEREIGN DEBT, STATE DEBT, TRUSTEE, UNSECURED CREDITORS, UNSECURED DEBT, WAGES, WORKOUT, WORKOUTS,
Online Access:	http://documents.worldbank.org/curated/en/2008/01/8972981/subnational-insolvency-cross-country-experiences-lessons https://hdl.handle.net/10986/6384
Tags:	Add Tag No Tags, Be the first to tag this record!