Bankruptcy Law in European Countries Emerging from Communism: The Special Legal and Economic Challenges

Bankruptcy law is developing rapidly in the countries of Central and Eastern Europe (CEE) that have recently escaped the domination of the Union of Soviet Socialist Republics (USSR). The communist governments fell in those countries that were separate from the USSR in 1989, and those countries that were a part of the USSR gained their independence and acquired new non-communist governments in 1989 (the Baltic states) and 1991 (Ukraine, Belarus, Moldova, and Russia). While many other areas of law that are basic to the development of a market economy need substantial development or revision, bankruptcy law is leading the way, for the most part, in all of these countries. However, the legal structures and economic conditions in the CEE countries are quite different from those in the United States and, in consequence, pose unique problems for the application of bankruptcy law. The most important difference is the process of privatization of state-owned enterprises, in which bankruptcy law has a unique and important role. This Article explores those legal structures and economic conditions and discusses their implication for bankruptcy law in these countries. This Article is based principally on that I have learned from my experience teaching seminars on bankruptcy law (and other subjects) in the CEE countries and in advising various government officials on bankruptcy law and other commercial law. It also draws to a certain extent on conversations with colleagues who have taught seminars similar to those that I have taught in the region