EBRD launches assessment tool to help mitigate coronavirus impact

ArmInfo.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 statement spread by the EBRD notes that 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.