Insolvency Ashford

The issue of insolvency shows how different attitudes to business in the US can be to those in Europe. In America, going bust can carry no stigma at all – people can even get plaudits for having tried their hand at entrepreneurship. In Europe, bankruptcy has traditionally been associated with failure, shame and punishment.

But the US is winning the argument and the rest of the world is starting to copy its approach. Broadly speaking, territories can be divided into two types on the subject of insolvency – those that favour the debtor and those that favour the creditors. The US has been a great exponent of favouring the debtor and US law is much more about trying to reach a resolution and letting the debtor go forward again.

As globalisation has created international bankruptcies, insolvency courts in different countries have had to deal with each other more often and have begun to see the advantages in making their systems more compatible – and they are tending to chose the US approach. In Sweden, for example, one of the biggest company restructurings in 2006 ended up not with the death of the business, but with it doubling size (after acquiring another) and with the original owners keeping 25% of the shares.

In the past decade, several countries have revamped their insolvency laws, including Germany, Belgium, England, Spain and France.

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