Criticising the Quest for Global Insolvency Standards

Abstract

In recent decades, various organisations have been busy in formulating international insolvency standards – norms to guide the opening and conduct of insolvency and restructuring proceedings affecting business enterprises. The objectives are to promote trade and development; to improve economic efficiency and the transition from a centrally planned economy to a more free market oriented economy; to assist in the raising of living standards by putting assets to their most effective use; and generally to ensure macro-economic stability. The international insolvency standards are intended as a tool or guide enabling nation states to upgrade and improve their relevant laws but have also been used more explicitly as an evaluation tool enabling national laws to be judged and ranked. This paper examines critically these standard-setting endeavours. It suggests that some of the standards are crude and unsophisticated advancing a questionable set of legal assumptions and failing to take adequate account of local conditions. The paper argues for a more nuanced approach that provides policy options for reform and draws attention to the likely consequences of particular reform efforts – an approach that is more cognisant of political and cultural sensitivities.