Flattening the Insolvency Curve: Promoting Corporate Restructuring in Asia and the Pacific in the Post-C19 Recovery


W. A Bauer ; R. S Craig ; Jose M Garrido ; Kenneth H Kang ; Kenichiro Kashiwase ; Sung Jin Kim ; Yan Liu ; Sohrab Rafiq

Publication Date:

January 29, 2021

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.


The Coronavirus disease (COVID-19) triggered a sharp contraction of economic activity across Asia and the Pacific. Policymakers adopted a “whatever it takes” approach in their initial response, relying mainly on liquidity support to help firms survive the shock. This paper discusses how the initial policy response should evolve as the region’s economies stabilize and enter the recovery phase. Many firms will need to repair their balance sheets and adjust their business models to the post-pandemic realities. The priority will be to support this process by facilitating the efficient restructuring of viable firms while allowing nonviable firms to exit. This requires action on three complementary fronts: reinforcing private debt resolution frameworks to flatten the insolvency curve, ensuring that adequate financing is available to support corporate restructuring, and facilitating access to equity to speed up the reallocation of jobs and capital into growth sectors.


Working Paper No. 2021/016





Publication Date:

January 29, 2021



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