Worldwide the concept of the law on bankruptcy is formulated in such way as to give to the companies the opportunity to restructure at the moment they face with problems such as insolvency, problems with creditors, disputes with shareholders, problems on ownership division, and others. It is exactly this law that foresees the right that the non-efficient parts of the enterprises might be restructured, creating at the same time opportunities for the bankrupted company to systemize, in cooperation with the creditors, liquidation of the liabilities.
The best example of the law on bankruptcy is the so called Chapter 11 system, which offers to the companies an excellent opportunity to come out of the process in a stronger position. One of the factors that contribute in the success of Chapter 11 in USA is a large team of legal cases that advices the parties. When a company applies for the implementation of Chapter 11 in USA, it has an effect that might urge all parties to moderate their requests toward the company. Furthermore, it is emphasized that the American economy has more power to regenerate itself compared to the European economies due to the superior environment in USD in term of corporate restructuring, in particular versus Central Europe, and this is related with the bankruptcy process. This legal instrument is widely applied by the federal authorities to facilitate the restructuring process of the companies in difficulties during the latest period of global crisis.
In Albania, the laws on bankruptcy have existed earlier, but never have been implemented. The new law – like any other law it is stated to be prepared according to the European standards, was expected to create exactly such a pre-condition for the companies. But what happened in reality. In an economically difficult environment, impacted by the global economic crisis, tax authorities publish a list of the companies that have or expected to initiate the bankruptcy procedures for the reasons related to: failure to pay the tax duties, passing to the passive status or resulting in losses for three year in consecutively (!!!!!!!!). The decision appeared as a bolt from the blue for some companies that in the first year of their activity are spending energy, and shedding the capital needed to compete in a difficult market. The most flagrant case was Eagle Mobile, the mobile telephony operator that due to the investment for building up the network and application of a modern mobile telephony technology for a short period of time manage to have more than 500 thousand subscribers, and at the same time it is considered as a very successful case in the mobile telephony, although it should complete a financial year with profit, but, unfortunately, because it has vegetated for several years as a state-owned company, results to be with loss in its financial activity for three years consecutively.
What is the message conveyed with such action to the both foreign and native investors that invested large capitals in Albania: to leave the activity since the second or third year of their activity in case they fail to be profitable. In this way to the risk that accompanies any investment in business, it is added another risk that comes from the extension of the term of return of investments. Thus, the investors should focus on investments that have short term of return, and perhaps at the end all will become tomatoes merchants or roulette owners in order to avoid such exposure.
All long-term investments that certainly do not allow a quick return of investments and that oftentimes forecast a negative balance of the profit-loss in the business plan for the first 3-4 years should avoid Albania. Here we can include 100% of the concessionaire companies in energy industry, cement factories or other serious investments, which only the period for setting up their working yards is one year and completion and putting into operation of their work up to 5 years!!!
Furthermore, the state itself is a debtor to VAT companies keeping them at bailment failing to reimburse them. Should we send the state itself to the bankruptcy? Unfortunately this is another demonstration of a small-minded authoritarianism that does not leave room neither for considering the opportunities for creating of a “partnership” situation between the state and business in building up a transparent and incentive environment for a swift and sound development of the country!
As the regional experts emphasize, at macro-economic level, a bankruptcy system that destroy values implies that the fall of Gross Domestic Product, shrink of employment and consequences of the economic recession will be considerably more present than necessary. Governments and decision-makers should focus their attention to it as well.
