Restructuring Lessons from the Covid Pandemic: Bail-Out vs. Market Approach

Bail-out, bail-in, or restructuring? In this article, we argue that restructuring has its rightful place in macro crises, such as the Covid pandemic. A policy primarily focuses on insolvency avoidance and bail-outs is misled it creates unwanted risk incentives, distorts market selection resource allocation, reduces beneficial transformative pressure. As a crisis typically goes hand with new fundamental developments, changing environment should be met by competitive innovation. Bail-outs which tend to preserve status-quo may justified part of comprehensive emergency strategy overcome temporary dysfunction. Such response strategy, however always designed concert options. We propose amendments German laws address shortcomings restructuring/insolvency uncovered during The goal improve regime so can better deal specific challenges crises.