Missing Debtors: National Lawmaking and Global Norm-Making of Corporate Bankruptcy Regimes
53 Pages Posted: 19 Sep 2008
Date Written: April 18, 2008
Our comparative case studies of bankruptcy lawmaking reveal an apparent political universal. In neither advanced (U.S., Britain) nor developing countries (China, Indonesia, Korea) do debtors consistently play a major role in corporate bankruptcy reforms. This is a puzzle. Debtors (managers/owners) are the subjects of bankruptcy law. It is their corporations that are liquidated or reorganized. It is upon their discretion that much decision-making relies in corporate restructuring. Yet, with few exceptions, they are little consulted or show little interest in contributing to reforms. How is this to be explained? Moreover, a similar pattern can be observed UNCITRAL's global norm-making for corporate bankruptcy regimes. Debtors are even more remote from the creation of model laws, legislative guides, and insolvency principles. Yet the central tendency of global norms has been to strengthen the rehabilitative ideal in corporate reorganization. Based on our research on global normmaking and national lawmaking in Britain, the U.S., China, Indonesia and Korea, the paper considers six hypotheses: (1) Debtors do not recognize their own interests; (2) Debtors are unable to mobilize; (3) Debtors shy away from the odium of corporate failure; (4) Debtors are blocked by other stakeholders from exercising influence; (5) The most powerful debtors can solve their financial problems outside bankruptcy law; (6) Debtors' interests are articulated by other influential stakeholders.
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