A discussion about the perception of bankruptcy in Austria and the U.S.
In 2004, more than 6,300 companies went bankrupt in Austria. This is 1.9 per cent of all Austrian enterprises. The creditors suffer great losses: They lose approximately 2.2 billion euro each year. However, Austria is not the only country that is affected.
Bankruptcy is a mass phenomenon in all market economies. Yet, it does matter in which country a company goes bankrupt. While in the USA insolvency proceedings are uniform to a large extent, the EU is a common market with 25 different insolvency proceedings, some of which differ greatly. These proceedings are moreover subject to experiments so that no one can be quite sure what to expect when going bankrupt.
In the USA, there is much less uncertainty. The European readiness to experiment in the field of insolvency law was the topic of the discussion 'In the laboratory of defeat – an international comparison of insolvency policies' on February 1, 2005 in Vienna. The Austrian Marshall Plan Foundation hosted this event.
Further education free of charge
The discussants were Dieter Stiefel, history professor at the University of Vienna, Hans- Georg Kantner, insolvency expert with Kreditschutzverband, Franz Mohr, insolvency expert in the Ministry of Justice, and Stephen H. Case, lawyer from New York. And it was Stephen H. Case, Member of the Bankruptcy Judges Education Committee of the Federal Judicial Center, who draw the perfect conclusion of the discussion: In the United States there are approximately 325 insolvency judges, each dealing with 5,000 insolvency cases per year.
In contrast to Europe there are generous possibilities for the entrepreneur to start anew after an insolvency. When entrepreneurs fail in the USA no one perceives this as a tragedy. Just the opposite is true: A failure counts as precious experience from which there can be learned a lot. Stephen H. Case even went as far as to refer to a bankruptcy as further education free of charge. In Europe the need for safety is much greater than in the USA. While in Europe the fear of failure and the social stigma attached to it make many shrink from starting their own businesses, Americans are comparatively more prepared to take risks.