Bankruptcy and second chance for SMEs (Dimension 2) in the Western Balkans and Turkey

                     Ensure that honest entrepreneurs who have faced bankruptcy quickly get a second chance (Small Business Act Principle 2)                   Realistically, policy makers understand that many SMEs will not succeed, and thus need bankruptcy laws to help them exit the market in an orderly fashion. These laws need to protect the rights of both creditors (repayment of loans, legal recourse due to firm failures) and debtors (maximising the preservation of assets, providing options to reorganise or liquidate an enterprise, and potentially restarting). Just as importantly, governments should promote a positive attitude towards second chances, encouraging honest entrepreneurs to start a new business after failure. Most economies in the Western Balkans and Turkey have established sound insolvency laws, with clearly defined procedures for distressed firms, with the exception of Kosovo which is drafting a new law. However, most economies still have procedural delays and lack some institutional support mechanisms such as early warning systems to identify distressed companies before they need to enter formal bankruptcy procedures. Discouragingly, not one economy has a programme in place to promote second chances after bankruptcy, thus exacerbating the stigma associated with failed entrepreneurs.      