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Publication(World Bank, Washington, DC, 2015-05-01) World BankEffective creditor/debtor rights and insolvency systems are an important element of financial system stability. The World Bank Group accordingly has been working with partner organizations to develop principles for insolvency and creditor/debtor rights systems. The Principles for Effective Insolvency and Creditor/Debtor Rights Systems (the Principles) are a distillation of international best practice on design aspects of these systems, emphasizing contextual, integrated solutions and the policy choices involved in developing those solutions.Based on the experience gained from the use of the Principles, and following extensive consultations, the publication has been thoroughly reviewed and updated in 2005, 2011 and 2015. The revised Principles contained in this document have benefited from wide consultation and, more importantly, from the practical experience of using them in the context of the Bank’s assessment and operational work.
Publication(Washington, DC, 2011-06) World BankThe importance of a modern, binding and effective insolvency regime is undeniable. Nearly 90 countries around the world have reformed their bankruptcy codes since Second World War, and over half of them have done so during the last decade. One of the key aspects in the reform process is the delicate balance addressed by a modern insolvency system which encourages the organization of viable firms and liquidates unviable firms. The financial and macroeconomic crises, as recently experienced in Pakistan, provide an opportunity for bankruptcy reform, as the potential employment impact often places the issue of insolvent companies high on the policy agenda. The three fundamental goals of any insolvency law are: 1) transparency, including a system for publicizing and indexing judgments, an accessible method for registering securing interest and an effective notice of insolvency proceedings, 2) predictability - in terms of being fair, simple and clear, which if not achieved ends up costing more as financial institutions compensate the uncertainty with additional credit costs; and 3) efficiency, which conceptually is clear but empirically is difficult to measure.