This chapter explains why the promotion of workouts and hybrid procedures can be particularly desirable in countries with inefficient insolvency proceedings, as it generally occurs in emerging economies. Moreover, due to the concentrated debt structures that firms usually have in emerging economies, reaching an out-of-court solution can be a more feasible option for viable but financially distressed firms. Nonetheless, informal workouts are subject to many limitations. For that reason, in addition to implementing several strategies to actively promote informal workouts, this chapter argues that emerging economies should adopt enhanced workouts where the support of certain norms or actors can facilitate a successful out-of-court restructuring. Additionally, it is argued that emerging economies should also implement hybrid procedures equipped with several tools existing in formal reorganization procedures. Nonetheless, due to the institutional weaknesses existing in emerging economies, the involvement of courts should be minimized. This chapter explains how this goal can be achieved while making sure that creditors remain protected against the opportunism of debtors.

This chapter seeks to provide a general overview of insolvency systems around the world, providing examples and references from more than fifty jurisdictions from Asia and the Pacific, Africa, Europe, the Middle East, and the Americas. Due to a variety of factors, including legal origins, legal transplants, and the adoption of "international best practices," this chapter shows that insolvency laws in advanced economies and emerging economies share many similarities. Therefore, the primary divergences between insolvency systems in advanced economies and emerging markets are not found on the "law on the books" but on the market and institutional environments in which insolvency law operates. For that reason, insolvency law in many emerging economies has failed to deliver the expected goals and ultimately serve as a catalyst for growth. Therefore, insolvency law in emerging economies needs to be reinvented.