Insolvency in selected OECD countries extent, trends, laws

There are differing growth patterns between enterprise and private insolvency in selected OECD countries. In Germany enterprise insolvency has been rising fast and continuously not only since 1990 after reunification but also after the insolvency reform of 1999. In contrast, in Canada and the US a clear downtrend of the number of enterprise insolvencies (per capita) is evident. Currently the level of enterprise insolvency in Germany is ranked third behind Sweden and France. The average annual growth rates of private insolvencies are considerably higher than for all insolvencies. Germany and the Netherlands lead the list in private insolvencies with double-digit growth rates; in Germany the average annual growth rate of private insolvencies was more than 40% for the period 1999-2005 while the USA and Canada display lower growth rates. It is to be assumed that differing insolvency legislation explains some of these differences. The 1999 reform of insolvency procedures in Germany also included the possibility of debt cancellation for insolvent private households. The insolvency numbers reacted very fast to this reform and doubled within two years. A further acceleration occurred after the new law was reformed two years later.