“Bankruptcy process must change”

The Minister of Justice, Nasip Naco, declared that the existing law creates uncertainties and must change.

“The current law does not specify the duties and responsibilities of administrators for bankruptcy, or the duties of the bankruptcy procedure. By not specifying the duties of administrators, there is a risk of repealing the bankruptcy measures. There is a risk that the bankruptcy measure will fail, both processes, by avoiding the legal responsibility. The law defines in general what the bankruptcy measure is, but it doesn’t specify the assets that define the extent of the bankruptcy measure”, Naco declared.

According to the World Bank, creditors in Albania recover from failed businesses only 40% of the debt, with the average of the OECD countries being 75%. But the most problematic indicator is that all businesses facing difficulties end up in total liquidity, even in cases when they can be saved.

“What happens when a business is liquidated? The economic value that is built in that business gets destroyed and jobs are lost. We must build a legal structure that allows businesses in difficulties to get reorganized. This doesn’t mean that every business will be saved, but healthy enterprises that need to be saved will not be destroyed just for a temporary financial difficulty”, declared Manhesh Uttanchandani, specialist of the World Bank.

The economic crisis has deteriorated the business balance, which was followed by a quick growth of bad loans, which today have the highest level in the region. But besides the known formal obligations, the economy has created a hidden chain of mutual debts by creating uncertainties in the market even for healthy businesses. The financial corporation, which is the private arm of the World Bank, will lead a three-year project to ease the bankruptcy procedures and reorganize businesses, which, according to their leaders, will improve the business climate.

Top Channel