Describe the World Bank's Insolvency Law System.

Commercial Insolvency. The World Bank's Principles for Effective Insolvency and Creditors/Debtors Rights Systems sets out a range of benchmarks, based on international best practices for evaluating the effectiveness of domestic Insolvency and Creditor/Debtor rights (ICR) systems. Though approaches vary, effective insolvency systems have a number of aims and objectives. Systems should aspire to: integrate with a country's broader legal and commercial systems; maximize the value of a firm's assets and recoveries by creditors; provide for both efficient liquidation of nonviable businesses and those where liquidation is likely to produce a greater return to creditors and reorganization of viable businesses; strike a careful balance between liquidation and reorganization, allowing for easy conversion of proceedings from one proceeding to another; provide for equitable treatment of similarly situated creditors, including similarly situated foreign and domestic creditors; provide for timely, efficient and impartial resolution of insolvencies; prevent the improper use of the insolvency system; prevent the premature dismemberment of a debtor's assets by individual creditors seeking quick judgments; provide a transparent procedure that contains, and consistently applies, clear risk allocation rules and incentives for gathering and dispensing information; recognize existing creditor rights and respect the priority of claims with a predictable and established process; and establish a framework for cross-border insolvencies, with recognition of foreign proceedings. Where an enterprise is not viable, the main thrust of the law should be swift and efficient liquidation to maximize recoveries for the benefit of creditors. Liquidations can include the preservation and sale of the business, as distinct from the legal entity. On the other hand, where an enterprise is viable, meaning it can be rehabilitated, its assets are often more valuable if retained in a rehabilitated business than if sold in a liquidation. The rescue of a business should be promoted through formal and informal procedures. Rehabilitation should permit quick and easy access to the process, protect all those involved, permit the negotiation of a commercial plan, enable a majority of creditors in favor of a plan or other course of action to bind all other creditors (subject to appropriate protections) and provide for supervision to ensure that the process is not subject to abuse.