University of Nottingham Commercial Law Centre

The cross-impact of public credit guarantee schemes and the insolvency regulation applicable to small enterprises

B55, Law and Social Science Building
Wednesday 8th March 2023 (15:15-16:45)
All welcome to attend.

Speaker: Juan L. Goldenberg, Visiting Scholar,  The Pontifical Catholic University of Chile

Discussant: Dr Sandra Frisby 

Chair: Professor Irit Mevorach

 With particular incidence on information asymmetries, access to credit by small enterprises continues to be a challenge around the globe. The use of public guarantee schemes seems to be an ideal solution, as it diminishes the bank’s financial risk by means of a very secure instrument, easily collectible against the State. However, this solution shows some problems, especially when the applicable regulation is not properly coordinated with the insolvency law. The lack of a systemic approach can cause difficulties for the reorganization of viable companies, leading to their liquidation, as the banks may prefer a scenario where the abovementioned guarantee may be collected and not to participate in difficult or risky rescue plans. If this is the case, the small enterprises’ credit risk will still be high and, in the end, the scheme will not effectively facilitate the access to other sources of credit. For instance, in Chile, the use of this kind of schemes (named “FOGAPE”) was very successful during the pandemic. However, the post-Covid economic crunch has shown that most of the companies that received this funding are now experiencing problems to reorganize their business in insolvency scenarios.

Juan L. Goldenberg. Ph.D. in law (University of Salamanca, Spain). Lawyer admitted in Chile. Professor of Civil and Insolvency Law at Pontificia Universidad Católica de Chile. Insolvency arbitrator at the Superintendency of Insolvency (Chile). Executive Vice-president of the Iberoamerican Institute of Insolvency Law (Instituto Iberoamericano de Derecho Concursal) and President of its Chilean chapter. Expert member of the Iberoamerican Institute of Law and Finance (Instituto Iberoamericano de Derecho y Finanzas). Author of five books related to insolvency and corporate issues and up to one hundred articles and book chapters related to insolvency, corporate, civil, consumer and family law.

University of Nottingham Commercial Law Centre

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