insolvency codes in response to an increase in loan defaults and business closures. Table 1 summarizes a number of recent reforms introduced following the 2008 financial crisis:

**Table 1.  Examples of Bankruptcy Reforms, 2008-2010**

|**Country**|**Year**|**Reforms**|**Objective/Outcome**|
|---|---|---|---|
|**Bolivia**|2008|Bolivia made the bankruptcy process more complex<br>by<br>suspending<br>applications<br>for<br>voluntary<br>restructuring. The only remaining option is a<br>bankruptcy procedure that typically takes many years.<br>The reform was intended to prevent viable businesses<br>that were hit by the financial crisis from exiting the<br>market(WorldBank2009).|The reform worsened the situation for<br>distressed firms wishing to seek resolution.<br>Many<br>companies,<br>which<br>would<br>have<br>otherwise been able to recover, were forced in<br>long liquidation procedure. (World Bank,<br>2009)|
|**Czech**<br>**Republic**|2009|, <br>The new Insolvency Act introduced reorganization as<br>the preferred method for resolving insolvency,<br>established an electronic insolvency register and set<br>new qualification standards for trustees. (Osicka, T.,<br>Kucerova, I., Mestanek, P., 2008)|According to a 2009 EBRD assessment, the<br>Czech Republic’s insolvency system, in<br>contrast to previous evaluations, was deemed<br>as<br>“highly<br>compliant”<br>with<br>current<br>international standards. The assessment noted<br>that new law positively affected the areas of<br>assets of the estate, creditor rights, and<br>reorganization(EBRD2009a)|
|**Estonia**|2008|In<br>December<br>2008,<br>Estonia<br>enacted<br>a<br>new<br>Restructuring Act, which, is modeled on the U.S.<br>Chapter 11 approach, as well as on the German<br>Insolvenzordnung and the Finnish Saneerauslaki. The<br>new Act is intended to help financially troubled firms<br>avoid liquidation and optimize the possibility of<br>retaining their reputation and the trust of their<br>creditors. The act enabled distressed companies on the<br>verge of insolvency to reorganize themselves,<br>restructure their debt, and apply other measures to<br>regain financial health and restore profitability.<br>Control of the troubled firm remains in the hands of<br>the management and late-pay penalties, as well as<br>other court-centered activities, are halted (EStandards<br>Forum, 2010).|,.<br>According to Sorainen, 2009, creditors may<br>find the new Act attractive because it offers<br>them a clear non-bankruptcy means of<br>maximizing the amount they are able to<br>collect<br>from<br>a<br>debtor.<br>The<br>new<br>reorganizations regime may prove attractive to<br>investors, who would be interested in<br>purchasing debt or equity in financially<br>distressed<br>firms<br>(U.S.<br>Department<br>of<br>Commerce, 2010).<br>Following the reform, bankruptcy costs in<br>Estonia are an average of 9% of the estate,<br>compared to a regional cost of 13.4%. The<br>average recovery rate is 37.5 cents on the<br>dollar in Estonia, compared to an average of<br>283centsintheregion(WorldBank2009)|
|**France**|2008|The reform improved the insolvency process by<br>encouraging pre-insolvency workouts and by ending<br>the requirement for estimation of the value of assets<br>by a public auctioneer.( WorldBank,2009)|. , .<br>The new legislation has as its main purpose to<br>promote restructuring rather than bankruptcy<br>proceedings (Lucheux, J-M., Pusch, O., 2009).|
|**Germany**|2009-<br>2010|Germany enacted temporary relief during the financial<br>crisis, which will be effective only until December 31,<br>2010. It eliminated its law requiring managers of<br>potentially viable companies to file for bankruptcy in<br>case of overindebtedness, where business survival is<br>more likely than in the case of illiquidity. The current<br>law allows these companies to continue to operate.<br>Moreover, in July 2010, the German Federal Ministry<br>of Justice issued an internal draft bill of the Act to<br>FacilitateFurthertheRestructuring ofCompanies,|A recent study finds that the fallout from the<br>financial and economic crisis caused more<br>than 34 percent of the bankruptcy applications<br>filed in 2009; it is expected that insolvencies<br>will reach a new record in 2010 (Wirtschaft<br>Konkret, 2010).|

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