Irina Selevestru, PhD in Law and insolvency expert, has conducted research on the concept of the “second chance” for entrepreneurs. She explains why this concept is no longer merely a theoretical idea, but an essential tool of economic policy.

1. Why is the “second chance” important?

The “second chance” concept for entrepreneurs is no longer just a theoretical notion; it has become a key economic policy instrument. The closure of a business affects not only the entrepreneur but also generates systemic consequences: job losses, reduced budget revenues, diminished competition, and instability in the business environment.

In the Republic of Moldova, the importance of this concept has grown during periods of economic crisis, such as the COVID‑19 pandemic or the war in the neighboring country. At the European level, the principle of offering a second chance is enshrined in the Small Business Act for Europe, which highlights the need to support honest entrepreneurs who have gone through bankruptcy.

Statistics show that only about 5% of bankruptcies involve fraud. The rest result from economic risk, market conditions, or managerial shortcomings.

2. The scale of the phenomenon in the Republic of Moldova

The analyzed data indicate a significant increase in the number of businesses declared insolvent between 2019 and 2024, followed by a decrease in 2025–2026.

In 2019:

• 183 businesses were declared insolvent
• The average number of employees per company was approximately 9.7
• The potential impact on the labor market could reach over 108,000 affected jobs

According to the latest official Doing Business reports (the most recent fully published round of indicators, including “Resolving Insolvency”), the Republic of Moldova ranked 67th globally on the Solving/Resolving Insolvency indicator, with a score of 54.8 (on a 0–100 scale), a recovery rate of about 32.1 cents on the dollar for creditors, an average procedure duration of around 2.8 years, and a cost of roughly 15% of the estate’s value. The duration and cost of the procedure are critical factors influencing the real chance of business revival.

3. Barriers to obtaining a second chance

Interviews with Moldovan entrepreneurs who have faced financial difficulties or insolvency procedures revealed a complex set of obstacles.

Internal factors

• Insufficient financial resources
• Lack of early‑warning knowledge
• Lack of crisis‑management skills
• Weak financial planning and control
• Conflicts between shareholders
• Underestimation of risks
• Lack of qualified staff

External factors

• Lengthy and costly bankruptcy procedures
• Difficult access to financing during and after the procedure
• Lack of information on restructuring mechanisms
• Insufficient public awareness of recovery tools and entrepreneurial culture
• Stigmatization of the “failed” entrepreneur

A key element identified is social stigma, which reduces the confidence of partners, financial institutions, and even family members in the entrepreneur’s ability to restart a business.

4. What needs to change?

The research outlines several strategic directions:

4.1. Reforming the legal framework to transform insolvency from a liquidation mechanism into a recovery mechanism

• Explicitly introducing the objective of debtor recovery into the Insolvency Law. Currently, practice focuses predominantly on creditor satisfaction. The law should clearly enshrine the principle of preserving viable enterprises and maintaining jobs.
• Clear differentiation between a debtor undergoing restructuring and a debtor in insolvency. This distinction is essential for:
  • access to financing
  • participation in public procurement
  • maintaining contractual relationships
  • reputational protection

Restructuring must be perceived as a recovery procedure, not a synonym for bankruptcy.

• Providing incentives to creditors who support restructuring, including:
  • reduced repayment rates
  • installment‑based repayment
  • favorable tax treatment for losses accepted under the plan
• Explicitly allowing tax authorities, through the Fiscal Code, to vote on plans that include reductions of public claims. Without this possibility, restructuring is blocked by the rigidity of public debts.
• Adjusting banking conditions for post‑petition financing. Banks need internal regulations enabling priority repayment financing (super‑priority financing).
• Solving the issue of covering costs for asset‑less liquidation procedures. Currently, lack of assets paralyzes the procedure and undermines trust in the system.
• Promoting accelerated restructuring as the preferred mechanism for viable enterprises, with shorter deadlines and lower costs.

4.2. Facilitating access to financing

• Ensuring the possibility of post‑petition financing, not only legislatively but also through updated internal regulations and policies of both the National Bank and financial institutions.
• Legally reducing interest rates for companies undergoing accelerated restructuring. Penalty interest worsens financial distress.
• Allowing entrepreneurs in accelerated restructuring to participate in public procurement. Automatic exclusion destroys recovery prospects.
• Access to financing for entrepreneurs in accelerated restructuring, including dedicated funds through ODA or other mechanisms.
• Dedicated “second chance” programs: grants, state guarantees, preferential credit lines.

4.3. Institutional development

• Creating public early‑warning services based on fiscal and financial indicators.
• Establishing free counseling centers for entrepreneurs in difficulty (legal, financial, managerial support).
• Training entrepreneurs in risk and crisis management, early‑warning systems, and rights and obligations in insolvency and restructuring.
• Psychological support to reduce stigma.
• Broad and accurate public information about failure, crisis, insolvency, and restructuring.
• Preventing misinformation and stigmatization of insolvency procedures.
• Educating both entrepreneurs and the general public to accept crisis and restructuring as normal economic phenomena.

4.4. Changing the economic culture

In developed economies, failure is seen as professional experience. European studies show that entrepreneurs who have gone through bankruptcy return more efficient and disciplined.

In the Republic of Moldova, however, the following persist:

• fear of failure
• stigma of the “failed entrepreneur”
• public shame
• misinformation about restructuring and insolvency procedures

This perception is fueled by:

• insufficient public communication
• lack of economic education
• automatic association of insolvency with fraud

5. Conclusion: the second chance as economic policy, not an exception

A second chance is not an act of indulgence but a tool for economic growth. An effective insolvency framework must balance creditor interests with the need to preserve entrepreneurial human capital.

The Republic of Moldova needs:

• legislation oriented toward recovery
• real financing mechanisms
• proactive institutions
• deep cultural change

Business failure should not mean permanent exclusion from economic activity, but a stage of learning and rebuilding.

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