Chapter 1: Corporate rescue through the ages
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Debt and credit have a primordial derivation rooted in the give and take of individuals sharing a society, needing groups to ensure protection from predators and support for more vulnerable members. It is therefore not surprising that collective processes dealing with over indebtedness (bankruptcy or insolvency) has an ancient history arising in parallel with the development of commerce. Although corporate rescue and restructuring seem to be new concepts connected to business in the modern age, arrangements and compositions with creditors are also not entirely new either. That said, the concept of a discharge and the slow ebbing of the stigma associated with debt and financial failure are mostly products of the modern age. As the first chapter of this Research Handbook on Corporate Restructuring, it provides a journey through the ages of insolvency through the development of the concept itself along with the evolution of procedures toward a concept of rescue. Beginning with a brief salutation to civilizations passing prior to ancient Rome, the harsh penalties of ancient Rome are discussed, followed by the more procedural developments of the Middle Ages and their harsh effects to destroy traders’ future business in favour of creditor satisfaction. Any rescue at these early stages required trust and agreement with creditors, circumstances that would be rare at the time. The development of the limited liability company was accompanied by a shift in the perception of business and the individual, having the effect of beginning the separation of personalities and making it possible to treat the man and the company as different entities. This development largely made it possible to begin chipping away at the stigma associated with debt, which was derived from those early primordial urges to maintain equality between members of a society. Although the 18th and 19th centuries saw some development toward corporate and business rescue, the latter half of the 20th century saw the true development of corporate rescue and rehabilitation as a viable and preferred option for companies in financial distress. It remains to be seen how the stress of today will influence the shape of rescue in the future.