Over-indebtedness is a permanent companion phenomenon to insolvency, and is often argued to be its main cause, although certainly not the only one. The value of unsettled liabilities has been steadily rising in the past decade, increasing to a large extent the number of businesses that can be labeled as over-indebted. The legal business environment framework is considered to have an important facilitating/limiting role in treating the problems arising from businesses’ over-indebtedness. The efficiency of the judicial system in resolving a commercial dispute is regarded as an essential part of such framework.
The goal of this paper is to detect the most reformative national economies in the European Union in regards to business over-indebtedness management. This includes the assessment of each country’s time frame, cost levels and procedural burden imposed on businesses when enforcing contracts through courts. This should reveal the features of a business environment which would serve as a platform for finding better indebtedness management possibilities.
The methodology entails using the World Bank data on the efficiency in settling commercial disputes across all EU national economies in the period of 12 years. The scoring system is developed and applied to the data. The indicators cover: time, expressed in days needed to resolve a commercial sale dispute through court; attorney, court, and enforcement costs, as percentage of the claim value; and the number of steps to file a claim, obtain and enforce court rulings.
Consequently, the countries are ranked according to the intensity of their reformative efforts in the field of over-indebtedness management, aimed at improving the practice in enforcing sale contracts in the researched period. The features of the highest ranking countries are analyzed, in order to determine the best practices in facilitating the role of such frameworks.