The New Age of Debt and the Common Function of Insolvency and Restructuring Law

eurofenix Spring 2017, 14

6 Pages Posted: 24 May 2017

See all articles by Stephan Madaus

Stephan Madaus

Martin-Luther-University Halle-Wittenberg

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

Madaus, Stephan, The New Age of Debt and the Common Function of Insolvency and Restructuring Law (January 24, 2017). eurofenix Spring 2017, 14, Available at SSRN: or

Stephan Madaus (Contact Author)

Martin-Luther-University Halle-Wittenberg ( email )

Faculty of Law , Economics and Business
Universitaetsring 2
Halle/Saale, 06108


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