Bankruptcy Reform in Russia: The Case for Creditor Rights in Russia

Bankruptcy Reform in Russia: The Case for Creditor Rights in Russia Russia at the dawn of the 21st century is experiencing a collapsing economy. In a world where healthy economies create and maintain capital, it is critically important that all efforts be made to assure all creditors and especially private direct investors that in the event of debtor-insolvency their business interests are protected. The role of bankruptcy law under a regime of what I call “creditor rights” is limited. The court system can be used to avoid a “creditors's race” to grab assets. Whenever the “going concern” value of a firm is greater than the sum of the assets sold separately a case can be made for a bankruptcy procedure as a way of protecting creditor rights. This paper examines the historical origins of the “creditor rights tradition” and advocates such a regime for modern Russia. This paper holds that especially with respect to Russia, we would do well to heed John Stuart Mill's advice and support reforms that favor creditors and protect the value of their rights. Those insolvent firms owned and managed by political oligarchs should be cut down, dismembered, and the assets they command transferred to new and more imaginative and solvent groups of managers. The Review of Austrian Economics Springer Journals

Bankruptcy Reform in Russia: The Case for Creditor Rights in Russia

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Kluwer Academic Publishers
Copyright © 2000 by Kluwer Academic Publishers
Economics; Public Finance; Political Science; History of Economic Thought/Methodology
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