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This chapter explains why the promotion of workouts and hybrid procedures can be particularly desirable in emerging economies, and more generally in countries with inefficient insolvency systems and companies with concentrated debt structures. Nonetheless, informal workouts are subject to certain limitations. For that reason, in addition to implementing several strategies to actively promote informal workouts, this chapter argues that emerging economies should adopt enhanced workouts where the support of certain norms or actors can facilitate a successful out-of-court restructuring. Finally, it is suggested that emerging economies should also implement hybrid procedures equipped with several tools existing in formal reorganization procedures. Yet, while hybrid procedures generally require miminal court involvement, it is argued that the design of these procedures in emerging economies should limit the involvement of the judiciary even further. This chapter explains how this goal can be achieved while simultaneously increasing the protection of creditors against the potential opportunism of debtors.

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4 - Promotion of Workouts and Hybrid Procedures

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4 - Promotion of Workouts and Hybrid Procedures

Summary