Personal Insolvency Law after the Enterprise Act: An Appraisal

Journal of Corporate Law Studies, Vol. 5, pp. 65-104, 2005

47 Pages Posted: 10 Feb 2005

See all articles by Adrian Walters

Adrian Walters

Chicago-Kent College of Law - Illinois Institute of Technology

Abstract

This paper offers an appraisal of the recent reforms of personal insolvency law introduced in England and Wales by the Enterprise Act 2002 which came into force on 1 April 2004. The paper suggests that the new law has four key structural elements: (i) the reduction in the duration of bankruptcy, (ii) the lifting of statutory restrictions and disabilities hitherto imposed on undischarged bankrupts, (iii) the new regime of post-discharge restrictions for so-called "culpable" bankrupts, (iv) the introduction of a "fast-track" post-bankruptcy individual voluntary arrangement procedure supervised by the official receiver. The new law is examined in the light of the policies that it seeks to promote and the implications for debtor incentives are considered. The paper's principal conclusions are (i) that the legal incentives for debtors to opt for an individual voluntary arrangement rather than bankruptcy do not appear to be particularly compelling and (ii) that the significant investment required in a system that differentiates between "honest" and "culpable" bankrupts will only be worthwhile if credit providers are prepared to treat the former significantly more favourably than the latter.

Keywords: bankruptcy, enterprise

Suggested Citation

Walters, Adrian, Personal Insolvency Law after the Enterprise Act: An Appraisal. Journal of Corporate Law Studies, Vol. 5, pp. 65-104, 2005, Available at SSRN: https://ssrn.com/abstract=664470

Adrian Walters (Contact Author)

Chicago-Kent College of Law - Illinois Institute of Technology ( email )

565 W. Adams St.
Chicago, IL 60661-3691
United States

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