Insolvency Law Reforms in the Asian Emerging Economies

This chapter explores the legal design choices of recent insolvency law reforms in Vietnam, Laos and Myanmar, which similarly reflect the “rescue” culture emphasized by the international donor agencies, with such common system designs as automatic stay involving secured creditors into the rehabilitation plan, eased resolution rule on the plan approval at the creditors’ meeting, and the minimized court intervention on such a plan. However, we also notice various forms of attempts in each country to incorporate room for legally narrowing the scope of its application. For example, the 2014 Vietnam Bankruptcy Law incorporates a composition procedure as a prerequisite stage in the unified procedure; the Lao 2020 Rehabilitation and Bankruptcy of Enterprise Law ultimately narrowed the application of the “Agreement of Settlement” procedure, which was the centerpiece of the World Bank’s 2019 draft, only to small and micro enterprises; also in Myanmar’s 2020 Insolvency Law newly introduced the MSME Insolvency procedure introduces aggressive reconstruction methods, without clarifying the very definition of the “MSME enterprise”. The reason behind this compromise is probably the policy makers recognize that such donor model does not necessarily meet the need to improve corporate finance in developing countries.