Corporate Insolvency Law: Perspectives and Principles

Citation

Finch, V., & Milman, D. (2017). Corporate Insolvency Law: Perspectives and Principles (3rd ed.). Cambridge University Press.

Chapter Summary

The third edition runs to about 790 pages and is organised as a short introduction, nineteen chapters and a bibliography. The publisher describes it as an interdisciplinary examination of corporate insolvency law that assesses recent reforms and anticipates new legislation. The sequence of titles moves from history and objectives, through the financial setting and the people who run insolvencies, to the rescue procedures, the liquidation chapters, and finally directors, employees and cross-border cases.

Introduction to the Third Edition

A six-page opening section introducing the third edition.

Chapters 1–2: The Roots of Corporate Insolvency Law; Aims, Objectives and Benchmarks

The first chapter traces where the modern law comes from. The second turns to what an insolvency regime is for and what standards can be used to judge it, which is the framework the later chapters on particular procedures are measured against.

Chapters 3–5: Insolvency and Corporate Borrowing; Corporate Failure; Insolvency Practitioners and Turnaround Professionals

These chapters set the commercial context before any procedure is described. Chapter 3 links insolvency to the way companies borrow, Chapter 4 looks at why companies fail, and Chapter 5 introduces the practitioners and turnaround professionals who work with companies in distress.

Chapters 6–12: Rescue; Informal Rescue; Receivers and their Role; Administration; Pre-Packaged Administrations; Company Arrangements; Rethinking Rescue

The longest group of chapters, covering the procedures aimed at keeping a business going. A general chapter on rescue is followed by informal rescue, then receivership, administration (the longest chapter in the group, about seventy pages), pre-packaged administrations and company arrangements. Chapter 12, "Rethinking Rescue", returns to rescue as a whole in a short chapter of about nine pages.

Chapters 13–15: Gathering the Assets: The Role of Liquidation; The pari passu Principle; Bypassing pari passu

The liquidation chapters. Chapter 13 covers the role of liquidation in collecting the company's assets; Chapters 14 and 15 examine the principle that unsecured creditors share equally and the ways in which the law and commercial practice depart from it.

Chapters 16–19: Directors in Troubled Times; Employees in Distress; Cross-Border Insolvency; Conclusion

The closing chapters look at two groups affected by insolvency, directors and employees, then at cross-border cases, before the conclusion draws the themes together.

Key Concepts

Context and objectives (Chapters 1–5)

• Aims and benchmarks: the purposes an insolvency system is meant to serve and the yardsticks used to judge whether it serves them.
• Corporate borrowing: the credit relationships that determine who is owed what when a company fails.
• Insolvency practitioners: the professionals who conduct insolvency procedures, set beside turnaround professionals who work with companies earlier in their difficulties.

Rescue procedures (Chapters 6–12)

• Rescue: the group of procedures designed to preserve a business rather than close it.
• Administration and pre-packaged administration: the court-supervised rescue procedure and the variant in which a sale is arranged before the administrator is appointed.
• Receivership: the remedy through which a secured creditor takes control of charged assets.
• Company arrangements: agreements binding creditors to a compromise proposed by the company.

Liquidation and its effects (Chapters 13–19)

• Liquidation: the winding up of a company and collection of its assets for distribution.
• The pari passu principle: equal sharing among creditors of the same rank, and the ways it is bypassed.
• Directors and employees: the legal position of the people closest to a failing company.
• Cross-border insolvency: how proceedings are handled when a company's assets or creditors lie in more than one country.

Critical Analysis

Strengths

• Organised around the whole life of a failing company. The chapter order follows a company from borrowing and failure, through attempts at rescue, to liquidation and its consequences, so a reader can place each procedure in sequence rather than meeting it as an isolated topic.
• Space for the contested questions. A chapter on aims and benchmarks comes before the procedures, and the pairing of "The pari passu Principle" with "Bypassing pari passu" and the closing "Rethinking Rescue" suggest that the book treats the objectives and effects of the law as open to argument as well as describing the rules.
• Wide range of stakeholders. Directors, employees and practitioners each have a chapter, which gives the book a broader view than a treatment confined to creditors' remedies.
• Depth on the main rescue routes. Administration and pre-packaged administrations receive roughly 110 pages together, and receivership and company arrangements have chapters of their own.

Limitations

• Scale and level. At about 790 pages, with a 50-page bibliography, the book is a reference and study text for students who already know the basics of company law; it is not a short first introduction.
• Focused on one jurisdiction. The only chapter on cross-border cases is about twenty pages long, so readers who need comparative or international coverage will need other sources.
• Dated by edition. This is a 2017 edition, so later legislation and reforms are not covered; check a current statute book or a later edition for the law in force.

Where It Fits in the Course

Within the company and commercial law list, this is the specialist book on what happens when a company cannot pay its debts. Dignam and Lowry's Company Law and Wild and Weinstein's Smith & Keenan's Company Law are student textbooks on the general law of companies; read one of them first so that directors' duties, corporate personality and company finance are familiar, because the insolvency chapters assume that background. Eva Micheler's Company Law: A Real Entity Theory is a theoretical treatment of the company and sits beside this book as a source of ideas about what a company is. Goode and McKendrick on Commercial Law is a general commercial law work and complements the chapters on borrowing and creditors.

The usual order is therefore a company law textbook, then this book for the insolvency component of a course, with the theoretical books for essays.

How to Use This Book

The book suits students on an insolvency or corporate finance module, and those writing dissertations on rescue, creditors or directors. Prior knowledge of company law and of the basics of secured credit is assumed.

A practical reading plan:

• Core: Chapters 2–3 for the objectives and the credit background, then Chapters 6, 9 and 12 (rescue, administration, company arrangements) and Chapters 13–15 (liquidation and pari passu).
• Add for a full insolvency course: Chapters 5 and 10 (practitioners and pre-packs), and Chapters 16–18 on directors, employees and cross-border cases.
• Background or optional: Chapter 1 on history and Chapter 4 on corporate failure give context; the introduction and conclusion are short and useful for orientation.

Read each procedure chapter with the relevant statute open, and use the aims chapter as a checklist: after each procedure, ask which of those aims it advances. Because the law has moved on since 2017, treat the book as the framework and check current legislation for details.