Washington, D.C., December 14, 2012
Today, within the framework of the Global Forum on Law, Justice and Development, the World Bank’s Insolvency and Creditor/Debtor Regimes Task Force announced the completion of its Report on the Treatment of the Insolvency of Natural Persons.
At the January 2011 meeting of the Task Force, members examined a number of insolvency-related issues that arose in the wake of the global financial crisis. As part of that discussion, the Task Force was asked to consider, for the first time, the topic of the insolvency of natural persons. After successive debates and consultations, the Working Group produced a report on the treatment of the insolvency of natural persons (the Report).
The widespread impact of the global financial crisis, not only on enterprises, but on individuals and families, has underlined the importance of formal mechanisms to address the problem of financial distress. The Working Group wishes to call the attention of policy makers from all countries to the issues analyzed in the Report. An effective regime for the insolvency of natural persons is of crucial importance for economic development and financial inclusion. A balanced regime provides tangible benefits to debtors, creditors, and society as a whole. The Report provides guidance on the characteristics of an effective insolvency regime for natural persons and on the opportunities and challenges encountered in the development of such a regime. By describing various problems and their consequences, the Report provides a conceptual framework for the questions that arise in the complex task of developing a system for addressing the insolvency of natural persons. It also arranges these observations into topics to aid policy makers in their analysis of the policy choices involved in legal reform.
The Working Group would like to stress the importance of the efforts undertaken so far. However, there is a pressing need to continue the work in this area by actively disseminating the findings of the Report and by developing a research agenda to inform the ongoing policy discussions on the treatment of the insolvency of natural persons.