Insolvency is not a Moral Issue, it is Business as Usual.
Without insolvency, the money system would not function.
Money is created by banks lending – that is why on banknotes, you can read the words “I promise to pay the bearer on demand the sum of 20 pounds” followed by the signature of the Bank’s Chief Cashier. Debt is money, money is debt.
The problem is we cannot all repay our debt, there isn’t enough of the stuff, due to the bank interest. In order that I repay my debt with interest, someone else has to fail to repay his principal debt, and end up in Bankruptcy. This is the nature of competition in a money economy – it literally is a fight for survival.
We don’t have much of a choice but to play along, as with money, we get the degree of specialisation in our modern economy.
To ease the blow for the losers in the money system, Insolvency Laws are in place to protect those companies and individuals when they find themselves being out competed in business, or victims of financial mishaps.
Protection of the Court
The Insolvency Act 1986 was the first real update of the Insolvency Laws since the Bankruptcy Act 1914. It created a new breed of professionals called Insolvency Practitioners, who take formal insolvency appointments such as:
- Liquidations
- Administration
- Personal Bankruptcy
- Receivership
- Voluntary Arrangements.