Bad debt problems and enterprise restructuring in eastern Germany

The bad debt problem of enterprises in Central and Eastern Europe (CEE) has received much attention in the recent literature about the reform process in these countries. The study begins by looking at the restructuring process and the opening balance sheets of enterprises in East Germany. We then compare the debt level and the liability structure of West and East German firms. Next, we examine what happened with enterprise debt when the monetary union of East and West Germany was implemented in July 1990. After that we look at working capital loans and the restitution problem, loan business, foundation of new enterprises and the bankruptcy law in eastern Germany. Finally, we draw some conclusions and briefly consider their application to the restructuring process in Hungary, Poland and Czechoslovakia. -from Author