Insolvency Law Through the Lens of Human Rights Theories

What would insolvency look like if we imagined it behind a Rawlsian veil of ignorance? Would it be a system designed to promote the common good at the expense of individual entitlements? Or would it be a system where pre-insolvency entitlements are impaired only when strictly necessary to maximise net asset distributions to creditors? Who would be protected by this system? Would it be creditors and workers only or would larger groups of stakeholders feature?

This Chapter’s primary value lies in rephrasing the theoretical debate on the purpose(s) of corporate insolvency law by employing Fineman’s vulnerability theory and international human rights law (IHRL) to challenge current approaches to collectivity. Scholars have considered the relevance of Fineman’s vulnerability theory to corporate distress scenarios. However, to date there have been no attempts to combine a human rights critique with Fineman’s vulnerability theory within the context of a proceduralist understanding of the purpose of insolvency law. As we explain below, Fineman’s theory can assist in challenging and deconstructing the underpinning assumptions in insolvency law, but it is not well-designed to offer an alternative reconstruction of the law. For that, we turn to IHRL and its subfield of BHR.