Chapter 8: Promoting Distributional Justice on Corporate Insolvency in the 21st Century
David Milman INTRODUCTION 1. This chapter will seek to offer a contemporary perspective on the perennial distributional problem on corporate insolvency under English law. That conundrum involves the development of legal strategies to resolve the inevitable issue of who loses out when an insolvent estate fund is found to be insufficient to satisfy all competing claims against it. There is often no question of full redress or reinstatement of rights in this scenario: rather the issue is one of allocating losses between competing interest groups. This chapter may therefore offer an interesting “spin” on the general debate centred on dealing with the masses. The focus of the study primarily will be on English law, with a limited amount of comparative input. Such a comparative perspective is appropriate because this is a problem that is ubiquitous in Western legal systems. The underlying difficulty for the legal system is one of insufficiency of assets, a phenomenon made worse by the tradition of allowing “carve outs” based upon pre-insolvency contractual arrangements between the debtor and its creditors. English law, which is often characterised as a pro-creditor jurisdiction, is particularly susceptible to this syndrome. The research question therefore will be to reflect upon how the approach of English law towards ensuring distributional justice on corporate insolvency1 has developed over the course of the past two decades and to consider whether further reforms could be made in order to promote efficiency, whilst maintaining an adequate level of respect for the requirements of distributional justice. The...
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