The World Bank assessed the insolvencyand creditor or debtor regimes (ICR) of Moldova pursuant tothe joint international monetary fund (IMF) and World Bankinitiative on the observance of standards and codes (ROSC).The Moldovan authorities have made remarkable progress overthe last decade in taking on board a broad range of reformrelated to the commercial law regime, including the lawspertaining to creditor protection and insolvency. Loans areoften over collateralized, reducing available credit andincreasing the incentives for lenders to rely primarily ontheir collateral for repayment rather than to supportrestructuring efforts. The secured transactions regimerequires improvement, importantly regarding the facilitationof important credit instruments over category of assets. Therules aimed at encouraging good corporate behavior at timesof financial distress may be improved and obstacles oninsolvency filing by creditors removed to ensure timelyfiling of insolvency proceedings. There are also certainrisks to creditor rights, including through abuse of theprocess by other creditors, which may disincentive the useof the system. The insolvency regime is now much moremodern, but it has implementation problems, and some aspectsof the law may require strengthening, including thecumbersome criteria for initiating insolvency proceedings bycreditors, the lack of rules that incentivize new lending tothe business in insolvency, the rules regarding transactionavoidance, due process aspects and some other rulesadversely affecting creditor rights, the law and practiceconcerning the use of encumbered assets, and thedecision-making process during insolvency especially in arestructuring context. The recommendations in this reportare presented with the hope that they will assist theauthorities in their continuing efforts to enhance thecountry’s legal and regulatory framework for enterprise credit.
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