Why Insolvency Regimes Matter for Small Business Growth

When one hears the term “insolvency,” it is likely that images of bankrupt business shutting their doors, banks and investors fighting to recover their loans, and individuals losing their jobs come to mind.Yet, as a new publication by the Debt Resolution and Business Exit Program at the World Bank Group points out, insolvency is not just about the liquidation of failing businesses. Rather, effective insolvency frameworks also provide an orderly legal process for the reorganization of insolvent entities. As such, insolvency law helps save viable businesses, and allows failed businesses to “exit” the market efficiently and effectively, returning assets to productive use.