International Project on the Stigma in Insolvency

The development of a so-called “rescue culture” has been a policy and legislative priority in many jurisdictions around the world for decades. At a domestic level, many countries now include one or more rescue-oriented measure as part of their insolvency toolkit and most jurisdictions have introduced rescue mechanisms into their corporate insolvency law regimes over the course of the last 40 years. However, recourse to rescue procedures has remained notably low when compared with liquidation, indicating an inconsistency between legal and policy priorities and the corporate reality. Therefore, this project is rooted in the recognition that the quest to implement a real rescue culture has largely failed, with stories of success sporadic and far from the norm. However well-motivated legal changes and policy efforts have been, the practical reality remains different.

The objective of this research is to identify the reasons why such a rescue culture has not produced the anticipated results with a view to making improvements through the reduction in number of avoidable liquidations. Ultimately, a better understanding of the socio-legal factors impeding the development of the rescue culture is paramount as otherwise, any lawmaker’s efforts towards forging a legal environment which incentivises rescue would hardly seem likely to yield the desired results.