The issue of moratorium on bankruptcy under unfavorable macroeconomic conditions

Sergey A. Gurinovich () and Tatiana A. Zhuravleva ()
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Sergey A. Gurinovich: Belarusian State University of Economics
Tatiana A. Zhuravleva: OSCO Group Services

Economic Consultant, 2023, vol. 4, issue 1, 39-49

Abstract: Introduction. The article is relevant due to the fact that enterprises face financial difficulties in crises, recessions, or other negative macroeconomic factors. The topic of a bankruptcy moratorium in case of economic instability is important for understanding the mechanisms of business support and economic sustainability. The article aims to analyze and understand the consequences of a bankruptcy moratorium for various participants in economic processes. Materials and methods. The materials were publications in peer-reviewed journals on economics, law, and management that deal with bankruptcy and moratoriums and their impact on the economy. The research methods used were case analysis and comparative analysis. Research Findings. One notable feature of a moratorium is introduction of mechanisms such as pre-trial agreements with creditors. This can facilitate constructive negotiations and allow financially viable companies to reach debt repayment agreements, thereby preserving their operations. Unscrupulous market participants may use these measures as a defense to delay necessary payments, benefiting from temporary restrictions on creditors’ collection actions. This can lead to a broader default crisis, putting financial pressure on creditors and potentially leading them into bankruptcy. Conclusion. Ultimately, while a moratorium serves as a temporary relief measure, its effectiveness in supporting the economy depends on the broader context. If the measures implemented by the authorities and the strategies employed by businesses prove insufficient to address economic problems, a moratorium may only delay inevitable bankruptcies rather than prevent them.

Keywords: bankruptcy moratorium; adverse conditions; economic resilience; COVID-19 pandemic effects (search for similar items in EconPapers)
JEL-codes: E65 G33 (search for similar items in EconPapers)
Date: 2023
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