Introduction to Corporate Insolvency
Insolvency law dates to the first bankruptcy statue in 1542, aiming to stop debtors escaping the realm and that debtor’s assets were divided equally and rateably among creditors. Before companies existed, the law was concerned with the insolvency of individuals only – i.e. bankruptcy. Historical background Cases such as Fowler v Padget (1798) 101 ER 1103 show that courts treated bankrupts as fraudsters. In 1705, bankrupts could be discharged from their debts for the first time: a ‘fresh start’. In 1825, debtors could initiate their own bankruptcy proceedings, as before only creditors could do so via a bankruptcy petition. The first companies’ legislation in 1844 included the Winding-up Act. Today, corporate insolvency and personal bankruptcy are both governed by the Insolvency Act 1986 and the Insolvency Rules 2016. Meaning of insolvency Creditors can petition the court to wind-up a company on the ground of insolvency. There are two types of insolvency set out in...
