Introduction of Research Framework

Insolvency law has been one of the priority areas in the post-Asian Currency Crisis legal reforms in Asian countries guided by the model laws provided by the leading international development agencies, such as the World Bank’s “Principles for Effective Insolvency and Creditor Rights Systems” that first appeared in 1999 and periodically revised. Such model is currently still influential in the contemporary legislative reforms in the ASEAN emerging economies of Cambodia, Laos, Myanmar and Vietnam, commonly referred to as the “CLMV countries”. In spite of its prevalence for two decades, the validity of this insolvency law model has not been sufficiently tested yet. There are doubts about the substantive contents of the model law which is emphasized as a design for “rescue” culture in order to invite new investments into failing businesses, by modeling it after the U.S. Federal Bankruptcy Code Chapter Eleven, which enables an almost automatic judicial approval of a pre-packaged reorganization plan at the sacrifice of the existing stakeholders including long-term financers and employees. The question of whether an insolvency law model designed for facilitating the prompt purchase of local enterprises by new funding providers can meet with the inherent legislative policy needs of developing countries has not been clearly answered yet. This research intends to examine the validity of the donor model, with a particular focus on the Asian emerging economies or CLMV countries, which have implemented each legislative reform under the close guidance of international donors.