Mid-Crisis Restructuring Law Reform in the United Kingdom

30 Pages Posted: 26 Jan 2023 Last revised: 28 Mar 2023

See all articles by Kristin van Zwieten

Kristin van Zwieten

University of Oxford - Faculty of Law; European Corporate Governance Institute (ECGI)

Date Written: December 31, 2022

Abstract

Economic shocks create insolvency law-making space, generating opportunities for legal reform that may be absent in good times. Policymakers may suddenly acquire a mandate to resource institutions or drive through a change in the law where in good times such reforms were likely to be foiled by interest group capture, or simply unlikely to get sufficient political traction. A crisis, then, is an opportunity for the well-prepared insolvency policymaker. Insolvency rule-making in crisis conditions is, however, plainly also risky. Making best use of the opportunity implies making more than temporary changes to the regime. But design choices made mid-crisis will almost inevitably be influenced by the features of the crisis itself, generating a risk that the result of the reform effort will be distorted law, ill-suited to the achievement of the lawmaker's objectives in the long-run.

This paper considers the permanent restructuring law reforms enacted in the UK during the first wave of the Covid-19 pandemic. At first glance, these reforms appear to exemplify the case of the well-prepared policymaker, poised to drive through carefully planned changes to the law when the opportunity arises. On closer inspection, however, a different picture emerges. The permanent measures, which were enacted in a fast-track legislative process, departed from the Government's pre-pandemic plan in material and undesirable ways. In some cases, these deviations mean that the original objective has not been achieved at all; in others, the objective has been at least partially achieved, but at unnecessary cost. Overall, the UK experience appears to better exemplify the risks of attempting insolvency law reform in a crisis, than the opportunities that a crisis affords to an insolvency policymaker.

JEL Classification: K22

Suggested Citation

van Zwieten, Kristin, Mid-Crisis Restructuring Law Reform in the United Kingdom (December 31, 2022). European Corporate Governance Institute - Law Working Paper No. 679/2023, Available at SSRN: https://ssrn.com/abstract=4337390 or http://dx.doi.org/10.2139/ssrn.4337390

Kristin Van Zwieten (Contact Author)

University of Oxford - Faculty of Law ( email )

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St Cross Road
Oxford, OX1 3UL
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
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1000 Brussels
Belgium

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