A Cross-Country Policy-Maker Perspective on Corporate Restructuring Laws Under Stress

The onset of the COVID-19 pandemic saw a period of rapid experimentation with insolvency law settings, designed to prevent a wave of insolvencies. Although governments acted quickly to keep debtors out of insolvency processes, they did not alter high levels of underlying indebtedness. In this worsening economic climate characterized by low growth, high inflation, fiscal tightening and high indebtedness, it appears, in certain countries, that these measures may have deferred, rather than prevented, high insolvency levels. A key economic legacy of the COVID-19 pandemic is the extensive fiscal stimulus and the resulting budgetary constraints this has placed on governments. In this context, there is increasing evidence of the importance of frameworks for out-of-court debt workouts as a complement to formal corporate restructuring frameworks.