According to a 2004 World Bank presentation available on the Internet, Bolivia passed a new Voluntary Reorganization Law in 2003 in order to allow troubled but still-viable firms avoid liquidation. However, the World Bank's current Doing Business Project webpage devoted to Latin American insolvency reforms notes that the voluntary workout option is no longer available, leaving only the lengthy and costly liquidation process as the only insolvency option in the country. The United Nations Commission on International Trade Law website discloses that Bolivia has not adopted the Model Law on Cross-Border Insolvency. Beyond these facts, however, there is insufficient publicly available information directly addressing Bolivia's compliance with the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank.

General Overview

According to the 2003 article "Bolivia" by Emilse Ardaya for the Global Judges Forum on Execution Processes and Insolvency, the core legislation for insolvency in the country is the Commercial Code of 1977. This law is supported by several other pieces of legislation that address various aspects of the bankruptcy and insolvency process. These include the Civil Code of 1975; the Code of Procedures of 1975; the Law on Arbitrage and Conciliation of 1997; the Law on Civil Process Abbreviation and Family Assistance of 1997; and the Penal Code of 1997. According to the United Nations Commission on International Trade Law website, Bolivia has not adopted the Model Law on Cross-Border Insolvency. A 2004 World Bank presentation discloses that, in 2003 a Voluntary Reorganization Law was adopted to encourage troubled but still viable firms to avoid liquidation. However, an entry on the World Bank's 2009 Doing Business Project webpage dealing with reforms in Latin America and the Caribbean reveals that Bolivia has suspended access to its voluntary reorganization program for troubled firms. This means that the only option for distressed companies is to go through full bankruptcy procedures, which are costly and time consuming.

The World Bank's "Doing Business 2009" awards Bolivia a rank of 59 (out of 181 countries) on the topic "Ease of Closing a Business." This constitutes a drop of 4 ranks from Bolivia's 2008 score of 55. The ranking is based on Bolivia's performance across three key business-closing indicators: the length of time required to complete the closing, the cost of closing as a percentage of the estate, and the return to creditors in terms of cents on the dollar. The World Bank offers comparable figures representing the average performance in the region and the average performance of member states of the Organization for Economic Co-operation and Development (OECD). For 2009, the average time required to close a business in Bolivia is 1.8 years, which is significantly shorter than the regional average of 3.3 years and falls close to the OECD average of 1.7 years. In Bolivia, 15% of the estate will go to the cost of closing, whereas the regional average is 15.9% and the OECD average is 8.4%. Creditors in Bolivia can expect to recover, on average, 37.3 cents on the dollar. In the region the average recovery is 26.8, and in the OECD the average is 68.6.