- Many businesses in EBRD regions affected by the pandemic will need restructuring support
- National legislation assessment will assist in addressing gaps in insolvency frameworks
- Online questionnaire will be available for public consultation until 31 October 2020
The European Bank for Reconstruction and Development (EBRD) has launched an assessment today that aims to provide detailed guidance on legislative gaps to address an expected increase in businesses needing to use formal restructuring procedures following the coronavirus pandemic.
The survey will provide an up-to-date map of restructuring frameworks across the EBRD regions in Europe, Asia and Africa. It aims to provide an overview of the options within pre-insolvency and insolvency frameworks across the economies where the Bank engages.
Given the global scale of the coronavirus crisis, many businesses around the world have experienced an interruption in economic activity that may continue into 2021. Many businesses will need to restructure both operationally and financially, while others may even cease to be viable. Ensuring that this does not translate into insolvent liquidation procedures for a majority of businesses and further economic damage is a key priority for the Bank.
Structured as a questionnaire, the assessment will be open for public consultation until 31 October 2020. It is available in English, French and Russian. For benchmarking purposes, the consultation is also open to countries where the EBRD does not invest. The results of the assessment as well as a report summarising its findings will be made publicly available online thereafter.
The assessment will also be benchmarked against international best practices to provide a functional, comparative tool for development institutions, governments and civil society to gauge the quality and effectiveness of a country’s insolvency laws. It will review existing national legislation in all EBRD economies of operations and consider the views of interested parties and local insolvency system users to assess their efficacy.
“Many of the governments in our regions have successfully enacted emergency legislation to ringfence the ramifications of the Covid-19 crisis, but longer term insolvency law reform is critical to ensure that these businesses are able to get back on their feet and thrive again,” said Catherine Bridge-Zoller, EBRD Senior Counsel, Financial Law Unit. “This assessment will help the Bank to deliver targeted reform support aimed at helping as many businesses as possible avoid an insolvent liquidation procedure due to the pandemic.”
Rodrigo Olivares-Caminal, a professor in banking and finance law at Queen Mary University of London who is working with the EBRD on the assessment, added: “This assessment is very relevant due to the important role that expedited restructuring procedures that occur mostly out of court can play in a post-Covid era. The assessment will also identify areas for simplification of procedures, particularly for small and medium businesses.”
To maximise the effectiveness of the assessment, the EBRD is supported by the International Development Law Organization (IDLO), INSOL Europe, and INSOL International and is cooperating with the European Commission. The initiative aims to promote the implementation of the principles set out in the UNCITRAL Legislative Guide on Insolvency Law. The EBRD is also working closely with Investment Councils, which have been established with EBRD involvement in Albania, Armenia, Belarus, Georgia, Kosovo, Kyrgyz Republic, Moldova, Montenegro, Tajikistan, Tunisia, Ukraine and Uzbekistan, to reach as many stakeholders as possible and ensure public and private sector country discussions on the assessment are fully coordinated.
As part of its mandate, the EBRD accompanies its investments with policy dialogue and advisory services. In pursuit of these efforts, the Legal Transition team promotes sound and well-functioning legal systems and contributes to the improvement of the investment climate across the EBRD’s 38 economies by helping to create an investor-friendly, transparent and predictable legal environment.