According to Mr. Clark, in countries such as Thailand, where the insolvency approach is closer to the civil law model, the process could be very time-consuming because a great deal of court involvement is required, which tends to slow down the process. Professor Gilson pointed out that the experience of judges could also be crucial. Sometimes, non-liquid assets such as land were used to support the argument that the company was still solvent, even though its cash flow could be dried up. Professor Gilson also speculated that there might be a cultural preference in favor of the existing owners and management over creditors' rights. However, he insists that this is likely to be only a cultural perception, and is different in kind from corruption.
Owners are less willing to take the losses, much less to lose control.
While in Indonesia, most banks were taken over by the government after the crisis, most Thai banks have resisted dilution of ownership, and maintained control. Another possible explanation for different experiences of corporate debt restructuring suggested by Professor Gilson is the institutional design of the various bankruptcy regimes. Some Southeast Asian countries, such as Thailand, put more emphasis on liquidation than reorganization. This differs from the US rehabilitation model, in which companies are encouraged to reorganize themselves. Professor Gilson argues that the bankruptcy laws in the region should be so reformed such that the laws should first give the companies a second chance to reorganize themselves, rather than mandating liquidation as the only eventuality.