Insolvency Frameworks across the EU:Challenges after COVID-19

Leonor Coutinho, Andreas Kappeler and Alessandro Turrini

No 182, European Economy - Discussion Papers from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: Efficient insolvency frameworks align incentives in such a way that viable corporate debt is repaid, while unviable debt is resolved. Moreover, in a context of high corporate indebtedness, the insolvency framework requires sufficient capacity to adequately deal with a rising number of insolvency cases. The aim of the present paper is fourfold: (i) to illustrate the main concepts relating to insolvency frameworks and their economic relevance; (ii) to review the main characteristics of insolvency regimes across EU countries; (iii) to evaluate the severity of corporate vulnerabilities stemming from the COVID-19 crisis, taking into account how insolvencies and non-performing loans have developed in response to the global financial crisis; and (iv) to highlight the remaining challenges for insolvency systems in the EU on the basis of an estimate of the potential increase in insolvencies (insolvency gaps) and existing institutional settings and structural characteristics.

JEL-codes: D40 E31 L51 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2023-02
New Economics Papers: this item is included in nep-eec and nep-law
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Persistent link: https://EconPapers.repec.org/RePEc:euf:dispap:182

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