Resolution of Financial Distress: An International Perspective on the Design of Bankruptcy Laws

Resolution of Financial Distress: An International Perspective on the Design of Bankruptcy Laws

Resolution of Financial Distress: An International Perspective on the Design of Bankruptcy Laws

Resolution of Financial Distress: An International Perspective on the Design of Bankruptcy Laws

Synopsis

This book focuses on the principles of and practical approaches to addressing the public policy trade-off involved in systemic corporate and financial sector crises and the lessons learned from the changes taking place in bankruptcy frameworks around the world. It includes research on recent public policy initiatives for distress resolution or market-based restructuring.

Excerpt

In late 1997 and through most of 1998, the world experienced a financial crisis that threatened the integrity of the global financial system. Though these global concerns were foremost in the minds of policymakers, there was also widespread recognition of the microeconomic nature of the crises: enterprises and financial institutions through much of East Asia, and also in other parts of the developing world, were facing severe financial distress. Emerging from the crises, therefore, required not only measures to improve global liquidity and win back consumer and investor confidence, but also a significant restructuring of the distressed corporate and financial sectors.

However, little research existed on mechanisms to engineer corporate and financial restructuring, particularly when the distress is widespread. in an effort to assess the magnitude of the problem and to help identify practical solutions, the World Bank invited leading international scholars and practitioners to a workshop in Washington D.C. in June 1999. the papers presented at this workshop were subsequently revised in light of the discussions, and edited to reflect the most recent World Bank research and analysis.

Although many questions remain to be answered, this book contributes to the literature by providing an analytical and practical approach to the design of bankruptcy systems. It discusses a range of topics including voluntary mechanisms for facilitating agreements between creditors and debtors, the role of international mergers and acquisitions, and the specific issues and concerns that arise in the course of restructuring financial institutions. While the book was motivated by events that took place after the crisis in East Asia, it also draws on experiences from other regions as well as on historical insights.

I believe Resolution of Financial Distress: An International Perspective on the Design of Bankruptcy Laws is a valuable addition to the World Bank . . .

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