Personal Insolvency Law and the Challenges of a Dynamic, Enterprise-Driven Economy.

Many jurisdictions across the globe are reviewing their personal insolvency law regimes. The worldwide “credit crunch” will accelerate this process. As part of this exercise, there is a natural desire to use personal insolvency law reform to encourage entrepreneurs to undertake risky commercial ventures without fear of excessively draconian consequences. In considering reforms designed to promote that goal, it is standard practice to undertake comparative law investigations. There are, however, inherent dangers here in adopting mechanistic solutions developed in other jurisdictions, because the cultural background may differ. “Legal transplants” do not always work. The potential impact of change must be carefully investigated in each local jurisdiction by making use of empirical evidence. The potential downside of liberalising bankruptcy law should also be borne in mind in that it could encourage irresponsible attitudes towards credit. Most bankrupts these days in Western countries are consumer debtors rather than failed traders. Bearing in mind these caveats, this article reviews the process of transition in personal insolvency law in English law and considers what lessons may be drawn by other jurisdictions from this pattern of evolution