Fundamentals of insolvency law

Bob Wessels and Defne Taşman

Chapter 1 in The European Insolvency Regulation, 2026, pp 2-7 from Edward Elgar Publishing

Abstract: Insolvency law regulates the transition from individual financial distress to a collective, structured process that balances creditor rights, debtor recovery, and public economic interests when a debtor falls into financial difficulty. Its purposes are threefold: (1) economic efficiency and value preservation by preventing destructive creditor competition; (2) enabling a fresh start for debtors through restructuring or discharge; and (3) ensuring collective satisfaction of creditors through equitable treatment. Ultimately, it serves the public goal of a healthy, resilient and adaptable economy. Key features include the transfer of control over the debtor's estate; a spectrum of procedures to include liquidation, restructuring, and debt discharge; collective mechanisms like automatic stays; and oversight by courts and insolvency practitioners to ensure transparency and compliance. Cross-border insolvencies add complexity due to differing national laws and the potential for forum shopping, prompting international initiatives like UNCITRAL's Model Law and the EU Insolvency Regulation.

Keywords: Insolvency Law; Financial Distress; Creditor Coordination; Restructuring and Liquidation; Cross-Border Insolvency; Economic Efficiency (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035396436
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