Jason J. Kilborn (University of Illinois Chicago School of Law) has posted A Tale of Two Holdouts: Personal Insolvency in Bulgaria and (Not) Malta on SSRN. Here is the abstract:
Bulgaria just became the most recent European Union Member State to implement a comprehensive personal insolvency regime, leaving Malta as the sole remaining holdout. This article examines the parallel but ultimately divergent paths of the two countries toward individual debt relief. Both Malta and Bulgaria long resisted extending insolvency relief to individuals, despite mounting personal debt problems and growing European support for a “second chance” for over-indebted small businesspeople. Both eventually relented only a few years ago in the face of an EU mandate to offer discharge relief to individual entrepreneurs. Malta stopped there. Facing additional pressure from EU authorities, Bulgaria went further, resolving a decade-long legislative battle and enacting a full-fledged personal insolvency law. This article examines the Maltese and Bulgarian laws extending insolvency relief to individual entrepreneurs, along with Bulgaria’s new universal personal insolvency law, including its eligibility requirements and provisions on no-asset cases, repayment plans, liquidation, and discharge. Although the new Bulgarian system has yet to be tested in practice, its architecture broadly reflects emerging international norms and offers reason for optimism. Malta’s continued exclusion of consumers from insolvency relief, by contrast, leaves it relegated to the ignominious distinction of being the EU’s last personal-insolvency holdout.
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Lawrence Solum