Mr Andres Federico Martinez
Senior Financial Sector Specialist

Andres F. Martinez is a senior financial sector specialist with the World Bank’s Insolvency and Debt Resolution team, in the Finance, Competitiveness and Investment (“FCI”) Global Department.

Andres has been a lawyer for over 20 years, has a master’s degree in Corporate law and specialises in insolvency and creditors’ rights. For over 12 years, Andrés has been advising countries from Latin America, Middle East, Europe and Asia on legal reforms with focus on debt recovery, insolvency laws and workout mechanisms.

Before joining the World Bank in 2008, Andres worked in private practice representing large creditors in debt recovery and insolvency cases.

Andres has published extensively, is an “INSOL Fellow”, is a member of the International Insolvency Institute, a member of the international advisory committee of the Singapore Global Restructuring Initiative (SGRI), co-chairs the World Bank Insolvency Task Force and Chairs the World Bank and INSOL International Legislative and Regulatory Colloquium.

STRENGTHENING INSOLVENCY FRAMEWORKS AHEAD OF ECONOMIC TURBULENCE

When countries face a crisis, a common reaction is to begin fixing the restructuring and insolvency system. This was evident during the Argentina crisis in 2001, the Asian Financial crisis of the late 90s, and the Great Recession in Europe around 2010/12, where many Balkan countries¹Including Serbia, Albania and others in the region embarked on government-led NPL resolution strategies²Sometimes supported by international organisations, such as the World Bank., many of which involved strengthening the insolvency system. Governments undertake these reforms for multiple reasons. Primarily, these reforms aim to mitigate the impact of the crises and prevent a wave of bankruptcies that could overwhelm the institutions managing the insolvency system, especially in countries where the system is widely used. Many of these reforms also intend to promote formal reorganisations to provide viable but financially distressed companies with a pathway to survival.

But are crises the best time to radically change the restructuring and insolvency system? Not really. While it is important to look at the country’s insolvency system during a crisis to avoid undesired effects, in an ideal scenario, the insolvency system should be ready to weather the storm before a crisis hits. There is nothing like time to give the legal, judicial, and business community the possibility to test the insolvency system in normal times, which can give a more accurate idea of its strengths and weaknesses. This experience could come in handy during a time of crisis to promote an orderly and predictable tool to weather the storm.

Existing uncertainties will likely slow growth³Ajay Banga, President of the World Bank, April 2025, https://finance.yahoo.com/news/global-uncertainty-certainly-hit-growth-165317195.html and may lead to economic turbulence. Bankruptcy cases are rising sharply in many places. In the US, corporate bankruptcies hit a 14- year high in 2024, as per a recent report⁴https://www.spglobal.com/market-intelligence/en/news-insights/articles/2025/1/us-corporate-bankruptcies-soar-to-14-year-high-in-2024-61-filings-in-december-87008718. Germany also saw its worst bankruptcy wave since 2009⁵https://www.reuters.com/markets/europe/germany-records-highest-company-insolvencies-since-financial-crisis-2025-01-09/. As economic uncertainty continues, more companies are expected to fail.

Insolvency systems are essential to deal with saving companies and with failing ones. One of their key functions is distinguishing between viable companies that should be reorganised and preserved, and nonviable ones that should exit the market promptly, allowing for the swift reallocation of their assets to more productive activities⁶Principles for Effective Insolvency and Creditor and Debtor Regimes (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/391341619072648570/ Principles-for-Effective-Insolvency-and-Creditor-and-Debtor-Regimes. Predictable and efficient insolvency systems yield numerous benefits, such as improved access to and reduced costs of credit, the encouragement of entrepreneurship, the maintenance of financial stability, and the creation and preservation of jobs, among others⁷World Bank Group. 2014. “Insolvency Reform for Credit, Entrepreneurship and Growth.” Insolvency & Debt Resolution Viewpoint. World Bank, Washington, DC.. They also help the creation or strengthening of a system of distressed assets⁸DARP—Creating Distressed Assets Markets – Lessons Learned Since the Global Financial Crisis and Opportunities for Investors in Emerging Markets Today. Available in: https://www.ifc.org/ content/dam/ifc/doc/mgrt/201910-distressed-assets-recovery-program.pdf and encourage a more efficient mobilisation of private capital.

With insolvencies on the rise worldwide, the demand for robust and predictable insolvency systems has intensified. As highlighted in our preceding forewords, should non-performing loans (NPLs) increase significantly, several pillars need to be examined by authorities to help address high NPLs⁹Dijkman, M., A. Martinez, V. Salomao, and K. Bauze. 2020. “COVID-19 and Non-Performing Loan Resolution in the Europe and Central Asia Region: Lessons Learned from the Global Financial Crisis for the Pandemic.” Policy Note, December 2020, World Bank, Washington, DC. https://thedocs.worldbank.org/en/doc/460131608647127680-0130022020/original/FinSACCOVID19andNPLPolicyNoteDec2020. pdf ., including an environment that encourages workouts¹⁰Enterprise workouts as well as their enabling environment was the topic of the recent World Bank Insolvency & Creditor/Debtor Regimes ICR Task Force (May 2024) and the forthcoming one in May 2025. as well as debt restructurings (including favourable or neutral tax treatment), protected creditors’ rights, a legal environment conducive to NPL sales and, of course, efficient and predictable insolvency proceedings.

The World Bank Principles for Effective Insolvency and Creditor/Debtor Regimes and the UNCITRAL Legislative Guide on Insolvency Law have been recognised by the Financial Stability Board as representing the international consensus on best practices for evaluating and developing national insolvency regimes¹¹Insolvency and Creditor Rights Standard – Financial Stability Board https://www.fsb.org/2011/01/cos_051201/. To avoid having to “repair the roof while it’s raining,” it is imperative for more countries to adopt legal frameworks aligned with international best practices and to continue strengthening the institutions responsible for enforcing their laws, with the ultimate goal of establishing predictable and robust insolvency systems capable of withstanding economic turbulence.