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  40 years of the rescue culture: revisiting the aims of corporate insolvency law in the United Kingdom


   The Business School

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  Dr Emilie Ghio  Applications accepted all year round  Self-Funded PhD Students Only

About the Project

Corporate insolvency laws and procedures have changed significantly over the last few decades in the UK, especially since the publication of the Cork Report in 1982. The report noted the limitations of procedures towards the rescue of companies and posited that the aims of a good modern insolvency law should be to ‘diagnose and treat an imminent insolvency at an early stage rather than a later stage [and] to provide means for the preservation of viable commercial enterprises.’ Therefore, one of the main aims of the report was to foster the development of the rescue culture.

The rescue culture is rooted in the idea that calculated risk should be promoted and that a system should be in place to lessen the adverse effects that failure may have on different stakeholders. Since the Cork Report, the philosophy of responding to corporate crises ex post has been replaced by an increased focus on the way that corporate actors manage insolvency ex ante. In addition, corporate actors have increasingly been encouraged to see corporate failure as a matter to be anticipated and prevented, rather than dealt with after it has occurred.

However, although the focus has been on early recourse and pre-insolvency mechanisms in recent years, the use of rescue procedures has remained quite low in the UK. Current figures suggest a possible failure of the rescue culture in the most productive parts of the economy. For example, out of 17,439 insolvencies in the UK in 2018, only 1,464 were administration cases and 356 were company voluntary arrangement procedures. Similarly, in 2019, out of 17,196 total insolvencies, only 1,814 were administration cases and 351 were company voluntary arrangement procedures.

The project aims to analyse the reasons for failure, the rescue procedures available to debtor companies, and the reasons why they could not, or were not, invoked. Several avenues of inquiry will be explored, including the costs and lengths of proceedings, the formalities required to engage in rescue procedures, as well as the possible stigma associated with insolvency which may prevent directors in filing for procedures and the lack of knowledge among corporate actors which hamper the efficient use of corporate rescue tools. Ultimately, this project aims to revisit the aims of corporate insolvency law, with a view to determining whether the objective of rescuing companies at (almost) all costs is still as viable today as it was in 1982.

(This project would be suitable for a part-time student).

Academic qualifications

A first degree (at least a 2.1) ideally in law with a good fundamental knowledge of company law and/or insolvency law.

English language requirement

IELTS score must be at least 6.5 (with not less than 6.0 in each of the four components). Other, equivalent qualifications will be accepted. Full details of the University’s policy are available online.

Essential attributes:

• Experience of fundamental academic writing.

• Competent in legal research.

• Knowledge of company law.

• Good written and oral communication skills

• Strong motivation, with evidence of independent research skills relevant to the project

• Good time management

Business & Management (5) Law (22)

References

Cork Report 1982; Insolvency Act 1986; Enterprise Act 2002; Corporate Insolvency and Governance Act 2020; V. Finch, ‘The Recasting of Insolvency Law’ (2005) 68 Modern Law Review 713; M. Sousa, ‘Bankruptcy Stigma: A Socio-Legal Study’ (2013) 87 American Bankruptcy Law Journal 435; T. Taijti, ‘Bankruptcy Stigma and Second Chance Policy: The impact of bankruptcy stigma on business restructurings in China, Europe and the United States’ (2017) 6 China-EU law journal 1; G. McCormack, ‘Apples and Oranges? Corporate Rescue and Functional Convergence in the US and UK’ (2009) 18 International Insolvency Review 109; C. Bridge, ‘Insolvency – A Second
Chance? Why Modern Insolvency Laws Seek to Promote Business Rescue’ (2013) Law in Transition 28; R. Goode, Principles of Corporate Insolvency Law (Sweet & Maxwell, 2018); M. Hunter, ‘The Nature
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 About the Project