OPINION

New laws on bankruptcy

It hardly makes sense that the Greek government is anxiously looking for foreign investment and at the same time maintaining a legal framework that condemns to prison investors that go bankrupt. Not those who close down their businesses on purpose to make money but those who fail to meet their expectations. Although Greece wants to bolster business activity, it still has a bankruptcy law in place that was regulated with legislation passed in 1935 and 1937. More absurdly, the laws deprive bankrupt businessmen of their political rights. They even foresee temporary detention sentences for debtors with good intentions. The government is taking substantial steps to overhaul the anachronistic legal framework. The new system should boost business activity by removing the obsolete and draconian measures that currently intimidate potential investors. Most importantly, it will introduce mechanisms that will protect borrowers and lenders alike. The attempt to update the bankruptcy legislation is a low-key reform initiative that can hardly grab media headlines. But it is crucial for a country that desperately needs to increase domestic investment and attract a greater share of foreign investment. Also it is crucial because it will give a second chance to investors and risktakers. Troubled companies will be given a chance to get back on their feet, as happens in all developed countries. The country’s outdated legislation puts the brakes on the growth of business activity, increasing the risks for prospective investors. Its overhaul is long overdue.