The willingness of banks and investors to support new businesses depends a great deal on the rules that govern failing businesses. Effective insolvency regimes save struggling firms when possible, or reallocate assets of failing firms more productively. These procedures focused on the end of the business life cycle have a profound impact on the beginning. Banks and investors are more willing to lend when they know they can recover at least some of their investment. Entrepreneurs are more willing to enter the market when they are not putting their entire personal fortunes at risk.
A country approach to insolvency is very important for development of adequate environment for business development. The Bankruptcy law should ensure certainty to the rights of the parties to financial contracts when one of the parties fails to perform for insolvency reasons. The MDTF-JSS and the IFC supported preparation of the Handbook on Serbian Bankruptcy law that covers basic principles of bankruptcy law, bankruptcy procedure, reorganization and international bankruptcy. The Handbook gives detail analysis of Serbian legislation, international practice and Serbian case law.
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