When thinking of bankruptcy, images of personal failures, bad management, or fraud often come to mind. However, some experts argue that bankruptcy should be perceived as a financial rebirth. Economists at the World Bank conclude that “effective bankruptcy laws that allow viable firms to reorganize and unviable ones to liquidate or be sold is a necessary condition for growth.” The U.S. has an extensive code of laws that cover financial death and rebirth for individuals, small businesses, and corporations but many other countries do not.
To share how U.S. Bankruptcy law can help businesses grow, the State Department’s International Visitor Leadership Program sponsored the visit of four Serbian officials from different ministries, its bankruptcy agency, and the commercial court in 2018. During their trip they met with bankruptcy judges in Washington, DC, Reno, Kansas City, and New York, including a day-long meeting with one jurist and a bankruptcy trustee. In addition, there were discussions with different institutes, congressional staff, Wall Street Journal bankruptcy reporters, Small Business Administration officials, law firms, law professors, and a half-day workshop at the National Judicial College.
Serbia is transitioning to a market economy and adapting its bankruptcy laws. Most recently it modernized its code covering corporate bankruptcy, but small and medium enterprises and individuals are not included, thus limiting their access to credit and growth. In 2020, Serbia will address new reforms to its bankruptcy code. A working group to include ministerial officials, appellate judges, law professors, scholars, and representatives from the World Bank will draft legislation to incorporate entrepreneurial companies and sole proprietorships. Marko Radovic, Ph.D. a member of the 2018 IVLP visit to the U.S., will be the working group’s secretary.
Following his IVLP visit, Dr. Radovic completed his thesis earning his Ph.D. in business law from the University of Belgrade. He writes, “through discussions with U.S. law professors and bankruptcy judges, I was able to prove the validity of my doctoral thesis.” His IVLP visit also helped generate several other academic papers based on the principles of American Law as well as authoring The Impact of U.S. Law on the Development of Serbian Commercial Law. According to Dr. Radovic, the quality of his thesis provided a convincing recommendation for his promotion to become a judicial advisor to Serbia’s Supreme Court. However, as he says, “my ambitions are not met. I plan to apply to be a bankruptcy judge and a professor of bankruptcy law.”
Finally, he comments, “cooperation between developing countries in the field of bankruptcy law is not only desirable, but mandatory. I would recommend the sponsors of the IVLP program continue organizing visits studying bankruptcy law…that would provide judges and young professionals…with quality education useful for both countries.”
The International Visitor Leadership Program is sponsored by the U.S. Department of State with funding provided by the U.S. Government and supported in its implementation by Meridian International Center.