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There is no paradox, only innocence. Did you know here in Portugal company directors used to be personally liable for social security payments for a business's

• TTPrograms 5y ago
  If this perspective of "startup failure is a deep moral sin insufficiently penalized by the government" is common in Europe then the lack of entrepreneurship is not very surprising.
  • vletal 5y ago
    Ltds are a common thing all around the world and work as you'd expect. What OP mentions seems to be specific to Portuguese law.
    • PostOnce 5y ago
      Running a bankrupt ltd means a lot of serious consequences in a lot of countries... like not being allowed to run another one for a long time.
    • zemvpferreira 5y ago
      You'd be surprised. If I'm not mistaken in some central European countries you could be sentenced to jail time after bankruptcy up to the 2000s. My point is precisely that ltds exist but are not the same world-wide. People (like myself) raised on American business folklore can be in for very rude awakenings when things start going badly.
      • vletal 5y ago
        We'll, the claim seemed overly broad. I wanted to point out that these harsh liabilities on the side of company directors are country specific and usually a company can go bankrupt as long as it's not the fault of the director due to them mishandling the company resources without pulling the director down with it.
        • zemvpferreira 5y ago
          Let's put it this way: If anyone is thinking of starting a business, they should spend a couple of hours researching and getting guidance from experts about the laws in their specific country. It's very easy to act cavalierly on advice meant for another jurisdiction without realising it. I have. Another quick example from Portugal: Did you know businesses or business-like entities (we have those for smaller entrepreneurs) are required to keep a 10-year archive of paper receipts, regardless of having already filed digital copies with the government or of any other common-sense exception? Most people here don't. But they can get serious fines for not being able to produce almost decade-old records they had no clue were mandatory. The points are: a) that there is no such thing as "europe" to begin with in a regulatory sense; b) but there are structural reasons why entrepreneurs in the area behave like they do, it's not an accident; c) only the paranoid survive, so do your research because there will be a test later and you don't get a do-over.
  • igorkraw 5y ago
    Startup failure is fine, not being accountable to your employees is what we have a problem with. The concept of the workers council in German law keeps throwing wrenches into the attempts to import the more exploitative business models from the US (N26 and Gorillas are recent cases) and Walmart completely flopped for related reasons. I do admire the business and entrepreneurship culture over the pond, but I think we can import the best bits of that without treating humans like fungible capital and burnout culture. It will just take a lot of time, especially in Germany (my native country), the business culture is still very conservative in the sense of rule based and authority/hierarchy oriented. I think if Germany adopted californias laws on non-competes and employee IP a lot would be gained already. Notably, Sweden has a very robust social security network and a lot of entrepreneurship as well, the Swedes I talked to explicitly pointed to it as something that eased their way into taking risks.
    • TTPrograms 5y ago
      Are you implying that startup success in America requires exploitation of workers? I don't think most people would consider the management of early employees at successful startups to be "exploitative". Most of them are heavily incentivized. There are specific issues with the worker models of Uber et al, but that's an orthogonal point to the general formation of startups.
      • kevinventullo 5y ago
        For ultra successful startups, sure everyone gets rich. I think the issue is with the 95% of startups that have no or moderate success who convince employees that lotto ticket equity and beanbag chairs are worth more than work-life balance, healthcare, and cold hard cash.
      • throaway1990 5y ago
        He's implying that workers should work hard and give all the earnings and IP to the govt so they can "redistribute" and "rehire" for communal good.
      • rjtavares 5y ago
  • zemvpferreira 5y ago
    That's the wrong framing. I suspect the reality is that many 20th century European law-books were written to protect workers and state from exploitative/criminal business owners. Rightly so. It's an accident that the most important bits of corporate and labor law don't distinguish between a 300-person shoe factory and a 20-person series-A startup. They weren't around when these concepts were codified and written in stone. The systemic and personal consequences are unfortunate but impossible to prevent.
• kwere 5y ago
  BANKRUPTCY IN ITALY: Before turning to the text of the Italian Bankruptcy Law, it seems appropriate to reflect briefly on the profound changes that have been progressively introduced by Parliament since 2005. The bankruptcy law’s very basis, and its philosophical point of view have been radically transformed in order to adapt to changing economic and historic circumstances. Traditionally, the law was directed at punishing those entering into bankruptcy for their bad faith behavior and breach of market rules; i.e. for failing to honor their obligations. The bankrupt was expelled from society and deprived of his civil capacity – a morte civile or civil disenfranchisement. The law as it historically stood did not envision those situations where the businessman was “honest, but unfortunate” or provide the leeway necessary for the exercise of business judgment in the running of an enterprise. Bankruptcy as a punishment, not as a tool for coping with economic factors often beyond our control, was the product of the unique economic and political circumstances that dominated Italy when the law was enacted on March 16, 1942. Over time the circumstances underlying the law’s approach slowly disappeared as society became ever more industrialized. The structural changes in the economy that accompanied it clashed with bankruptcy rules developed and intended for the predominately agricultural economy that existed during the first half of the last century. This scenario, from a subjective point of view, is then inserted in an objective context that has completely changed over the intervening 60 years. Globalization, and ever bigger and unstable markets, steeper competition, products that rapidly become obsolete and a society bombarded by advertisements have necessitated modification in the Italian bankruptcy law. The incompatibility of the law with the facts and developing international practice required a Copernican revolution of the very basis of bankruptcy in the Italian legal system by issuing a series of innovative reforms to overcome – through procedures allowing for agreements between creditors and debtors – obstacles that the lack of liquidity introduces into the relationship between employees, suppliers, creditors and businesses. The work of modernizing the law moved the process’ center of gravity from one focused on judicial proceedings and court control to one that involved all interested stakeholders, including the “piano attestato”, or in more complicated situations, restructuring plans and the “concordato preventivo“. In more recent times (October 2012), the automatic stay was introduced to protect the value of the whole business when timely action is taken to avert the crisis by filing for bankruptcy protection in order to obtain the time necessary to enter into a restricting plan or “concordato preventivo“. All these procedures involve the debtor reaching some form of an agreement with creditors. Under the old system, a judge would oversee the proceedings with the assistance of a trustee who operated much as the court’s right hand or executor. Following the reform, the proceedings are now entrusted to a team composed of a trustee and a creditors’ committee who work in tandem to protect the interests of the creditors and the procedure as a whole. In those cases where the sole goal of the proceedings is to liquidate the bankruptcy estate, the trustee and committee develop a liquidation plan designed to transition the estate’s assets back in to the market. The judge still has a role to play in this system, however he or she adopts a less visible role only intervening in those cases where disputes arise or the creditors’ committee is not timely formed or some extraordinary activities have to be authorized such as settlements, special agreements etc. Moving from a “judge-centered” to a “stakeholder-centered” model was dictated by another related change: the move of the judicial system as a whole from a formal procedural model to one based on the will of the parties. This change was induced by a desire to remove formal barriers to resolving the economic crisis of the entity entering bankruptcy. The new model took inspiration from other systems and implemented a process that includes that possibility of concluding settlements, debt restructuring agreements and other arrangements with creditors. A single philosophical line of thought runs between all these “therapeutic” mechanisms: they are designed to forward an economic purpose by sanitizing the enterprise in crisis and transition its assets back into the market as quickly as possible. The new law promotes agreement and supports it by employing a flexible and informal system. Accordingly, those actions taken in pursuance of any approved agreement will be protected from third party challenges. In many ways the reforms have brought about a “futuristic” system where the interests of the creditors and the debtors can be merged in a “New Co.”, a new company, to which the task of overcoming the crisis is entrusted. This includes the conversion of debt into equity, or the application of “put and call” selling, or protecting a company while it weathers the crisis, or debt restructuring so as to allow more time for payment or alternative methods thereof. The reform was also influenced by other public interest considerations. One such important factor was the cost associated with the judicial management and coordination of bankruptcies. Considerable public resources are required for the court system to oversee and manage multidisciplinary proceedings such as the liquidation of a company or its administration while agreements are made with creditors. Every judge who essentially becomes a company’s administrator is another not sitting in other cases where delegated administration is not possible. The requirements for admission to the bankruptcy procedure have also worked to keep in check the number of cases that can be filed before the courts by permitting only those cases that are of sufficient economic weight. The new law looks to defend the economic value and production capabilities by finding an agreement between all the stakeholdersto put the enterprise back in motion, to provide a “fresh start” and allow the entity to overcome the crisis. The philosophy animating the new bankruptcy law no longer revolves around an interest in the punishment of the bankrupt and the liquidation of his assets, but one that seeks to protect the public interest in a functioning economy saving and maximizing the value of the enterprise. Today, bankruptcy finds its greatest value through the system’s ability to provide a discharge of debt. A bankrupt who understands early on that he is headed toward insolvency and that collaborates with the system, by placing all the company’s future revenues at the disposal of the bankruptcy proceedings, can under the terms thereof liberate himself from unsatisfied creditors at the end of the liquidation proceedings. Discharge, a new fresh start for the debtor, is made possible in light of the authoritative jurisprudence of the Court of Cassation. The actual criteria established by the Supreme Court require a case-by-case evaluation to be made by the court to ensure greater fairness and a more realistic result. Bankruptcy is an unfortunate part of any healthy functioning economy. The role of the law in such circumstances is to provide a mechanism by which the public interest is best served, that is to say, that secures the timely recovery of the economic assets involved so that they may continue to contribute to the general welfare. The Italian Bankruptcy Law as modified in 2012 attempts to strike the right balance between favoring the continuing concern and not sheltering those economic actors who abuse the system to the detriment of society. The historical origins of the law are still apparent in its structure, however, no system will ever be completely divorced from its past. The reforms have attempted to keep the best of what came before while adapting to new challenges. The systematic reforms discussed above are the reason I felt it opportune to offer an English translation of the Nuova legge fallimentare, the new Italian bankruptcy law. The reforms have brought about a modern, efficient and effective system that is attuned to the market and the capable of coping with economic ebbs and flows. While it is not perfect, the new law is a fine tool for providing answers to the questions that any investor or creditor asks during bankruptcy: When and how much of my investment/claim will I recover? and how much will it cost me? The reformed Italian law ensures needed predictability to the response to these questions. https://www.iiiglobal.org/sites/default/files/the_italian_bankruptcy_law.pdf https://www.iiiglobal.org/sites/default/files/the_italian_ba...