Involuntary Bankruptcy as Debt Collection: Multi-Jurisdictional Lessons in Choosing the Right Tool for the Job
24 Pages Posted: 5 Nov 2012 Last revised: 26 Nov 2012
Date Written: November 5, 2012
This paper contrasts the usage of creditor-initiated or 'involuntary' bankruptcy in England, the Netherlands and the United States, and it presents empirical evidence to reveal and explain stark divergences among these three otherwise very similar systems. US practice is consistent with the hypothesis that involuntary bankruptcy should represent a rare exception to the ordinary process of individual claims enforcement. Elevated levels of involuntary bankruptcy in England and the Netherlands pose a theoretical and practical conundrum. Analysis of empirical data suggests that involuntary bankruptcy is commonly used in England and the Netherlands for deleterious purposes inconsistent with the modern goals of bankruptcy. These discoveries suggest that policymakers should consider restricting involuntary bankruptcy in a variety of ways, especially against individual, natural person debtors.
Keywords: bankruptcy, involuntary, debt collection, creditors rights, judgment enforcement, civil procedure
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