The New Age of Debt and the Common Function of Insolvency and Restructuring Law
eurofenix Spring 2017, 14
6 Pages Posted: 24 May 2017
Date Written: January 24, 2017
This short paper highlights that a functional analysis of insolvency and restructuring proceedings reveals that all such proceedings share one common effect: debt cancellation. In order to only cancel unsustainable debt, all insolvency and restructuring procedures have developed procedural mechanisms able to identify what fraction of a debt a debtor is still able to serve. While these insights seem to be common knowledge to macro-economists, they have received little attention in the legal discussion.
This short paper explains these effects and suggests four fundamental conclusions for legislators as well as the academic discussion about the principles of insolvency and restructuring procedures.
Keywords: debt, debt canellation, insolvency, restructuring, principles, non-performing loans
JEL Classification: G33, K20, K22, K35
Suggested Citation: Suggested Citation