The insolvent estate is comprised of the property which is the subject matter of an insolvency proceeding. It is important that there is clarity in this respect. If the proceeding is distributive, the estate is the property which will be realized for the benefit of the creditors; if it is reorganizational, the estate is the property which will be protected by any stay and which may be the subject of the reorganization. The Act does not define the insolvent estate for the purposes of its corporate insolvency provisions; the crucial term used by the Act is ‘property’.
This book provides a critical examination of modern English corporate insolvency law, in particular the procedures under the Insolvency Act 1986, from both conceptual and functional points of view. It focuses throughout on identifying a rational explanation for the form that the rules and institutions of the modern law take or, where there is no such rational explanation, the history which has resulted in the present position. A central theme of the book is that the nature and fundamental purpose of insolvency proceedings themselves dictate many of the features of English insolvency proceedings. For example, collective execution on behalf of creditors necessitates definition of the insolvent estate and the provision of rules concerning provable debts and transaction avoidance. Many key features of the insolvency procedures are therefore essentially matters of practicality rather than principle, albeit practicalities applied justly and fairly. The book covers the nature and purpose of insolvency law; the procedures; the administration, supervision and regulation of insolvency proceedings; the insolvent estate and transaction avoidance; investigation and wrongdoing by directors; phoenixism and pre-packing; distribution of the insolvent estate; and, lastly, cross-border insolvency. It examines the various principles of insolvency law in the context of practice, drawing upon historical perspectives where appropriate. By explaining how the law takes the form that it does, the book promotes an understanding of the present law and institutions as a whole, and shows how this understanding might inform future developments.
Insolvency law is concerned not only with the relations of individual debtors and creditors but also with the wider social implications of financial default and malpractice. In English law, one aim of the insolvency regime is the investigation and prosecution of wrongdoing by individual debtors and by the directors and officers of insolvent companies. Accordingly, English insolvency law includes certain mandatory investigative procedures and a series of provisions which form part of the criminal law. Inevitably, these provisions are primarily aimed at conduct which can loosely be described as "fraud".' O n the other hand, the presence or absence of fraud has little to do with the operation of the civil aspects of English insolvency law. I n other words, the prosecution of malpractice and the administration of the insolvent estate are separated and subjected to different approaches.Despite the high profile of some of the larger recent insolvencies involving fraud, it is not a commonplace feature of English insblvencies. Inevitably some fraud goes undetected or unreported but, in any event, fraud at any perceptible level needs to be taken very seriously. It is a statement of the obvious that failure to take proper action in respect of perceived cases of fraud encourages a process of degeneration in attitudes to debt.This article examines the English perspective on insolvency and fraud. I t examines the extent of the problem and reviews the applicable legal procedures. The bulk of the article is necessarily preoccupied with matters which fall within the province of the English prosecuting authorities or officeholders appointed in English insolvency proceedings. These matters are nonetheless of interest to foreign lawyers and their own domestic clients because the remedies operate for the benefit of all creditors. However, there are some provisions in English insolvency law which are available to individual creditors (whether domestic or foreign) and these may be of particular interest to foreign lawyers.* LLM (Lond), Solicitor and Partner, Norton Rose, London. Since fraud involves deception, its true extent will never be known. However, there are a number of sources from which useful information can be obtained. Official statistics on prosecutions are available, and the Society of Practitioners of Insolvency ( SPI)3 periodically publishes surveys based on questionnaires sent to its members. The most serious cases of fraud are handled by the Serious Fraud Office (SFO), which has handled the prosecutions arising out of the BCCI, Maxwell and Polly Peck cases. Barings is also the subject of continuing investigations. As at April 1996, the SFO had 70 active cases with an aggregate value of alleged frauds in excess of L3 billion. Of the cases investigated in the preceding year 65% or more had a foreign element. The SFO workload covers the full spectrum of major fraud. Some indication of the extent to which the cases are insolvency related can be obtained from its own analysis of the types of fraud.4 1995-1996 1994-2995 1...
Insolvency practice is highly regulated. Regulation is needed because, as described in earlier chapters, the day-to-day conduct of insolvency proceedings is entrusted to office-holders and the supervisory jurisdiction exercised by the court is both selective and triggered by application.
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