The Last Bankrupt Hanged: Balancing Incentives in the Development of Bankruptcy Law
Northwestern University School of Law
August 10, 2009
Duke Law Journal, Vol. 59, No. 7, April 2010
This paper frames the history of the Anglo-American bankruptcy tradition as a search for solutions to the basic problem that has from the first underlain the bankruptcy process: how to obtain the assistance of the debtor in his financial dismantling. The pivotal moment in this story came in the years 1705-1706, when the English Parliament drafted a bill making the bankrupt’s refusal to cooperate with the commissioners running his bankruptcy a capital crime. Almost as an afterthought, they also introduced discharge of debt. Incentivizing cooperation with discharge, of course, would have a fruitful future. Coercing the debtor to be honest, however, proved a failure. Fraud flourished, and few perpetrators were executed, in part because creditors and jurors found putting bankrupts to death a bit excessive. And yet, despite the failure of the English experiment with harsh penalties, the desire to punish debtors has remained a part of the culture of bankruptcy to this day.
Number of Pages in PDF File: 91
Keywords: capital punishment, bankruptcy, legal history
Date posted: August 13, 2009 ; Last revised: July 19, 2010