How different legal systems contribute to the efficiency of insolvency proceedings can be judged against the costs, speed, and transparency of these regimes: Costs: Insolvency proceedings in Europe tend to be lengthy and costly, in particular for SMEs. [23] In the euro area, for example, the cost of insolvency amount on average to 10% of the insolvency assets’ value. [24] The range of this value across countries is quite high though, with a mininum of 3.5% and a maximum of about 22%.
Hence, when restructuring a loan and liquidating assets, almost one fourth of the total value may get lost due to the cost of insolvency. These are resources that cannot be put into more productive use after the restructuring has happened.