FSB launches review of corporate debt practices

Comments from financial institutions, businesses, insolvency practitioners and other stakeholders are sought with respect to ADR.

The Financial Stability Board (FSB) is seeking feedback from stakeholders as part of its thematic peer review on corporate debt restructuring.

The aim of the review is to support Covid-19 response efforts by examining the practices, experiences and lessons of FSB member jurisdictions from out-of-court debt settlements (OCWs) and the implications for financial stability .

The peer review will take stock of existing and planned OCW frameworks in CSF jurisdictions, examining the experience of particular mechanisms that have been or are being used to address business stress, including the role of authorities. the financial sector.

The review will also seek to identify good practices and examples of the effectiveness of OCW frameworks in terms of preserving value for viable businesses and the usefulness of their debt restructurings in resolving NPLs and dealing with large numbers. companies in difficulty.

The summary terms of reference, available here, provide more details on the objectives, scope and process of the review. The FSB has distributed a questionnaire to its member jurisdictions in order to collect information in this area.

As part of the peer review, the FSB is also seeking comments from financial institutions, businesses, insolvency practitioners and other stakeholders on OCWs, including comments on:

  • the types of OCW frameworks (for example, informal workouts, enhanced workouts, and hybrid workouts) most often used in your jurisdiction and why
  • characteristics of OCW frameworks that can be particularly useful in minimizing damage to the economic and financial system caused by business failures due to Covid-19
  • the appropriate role of financial sector authorities in facilitating debt restructuring, including in inducing the participation of various stakeholders in an OCW
  • experiences and challenges in using OCWs, including managing the volume of NPLs in the financial system

Comments should be sent to [email protected] before August 9, 2021.

The peer review report will be released in early 2022.

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