ALSA 2025 meeting

The Asian economy is significantly shaped by Micro, Small, and Medium Enterprises (MSMEs), which make substantial contributions across the region. MSMEs constitute 97% of privately owned businesses, provide employment to 55% of the labor force, and account for 28% of economic output in Asian countries (ADB, 2022).
MSMEs in Asia have been striving for recognition and inclusion within insolvency resolution mechanisms. Due to their diverse constitutions, many MSMEs may not qualify as corporate entities, thereby falling under personal insolvency laws in some jurisdictions. The influence of local conditions and provincial legislation further complicates the development of a unified, centralized insolvency resolution framework for MSMEs. Additionally, challenges such as inadequate financial record-keeping and inconsistent disclosure practices hinder effective resolution.
These complexities have, in effect, relegated MSME insolvency resolution in Asia to primarily a debt recovery process. For instance, India’s MSME-focused pre-packaged insolvency resolution mechanism has seen only 14 cases registered over four years since its introduction, reflecting limited traction.
Through this paper, the author emphasizes the need for a stakeholder-driven insolvency resolution framework—one that also imposes a deterrent effect on borrowers who fail to comply with established norms. To this end, court-controlled mediation is proposed as a viable alternative, the same would also facilitate cross-border insolvency resolutions taking the advantage of the established mediation related capacity and infrastructure. This approach offers key advantages including procedural flexibility, reduced court intervention, and judicial supervision of outcomes, making it especially suitable for MSME insolvency resolution.