ABSTRACT
Modern corporate insolvency law can trace its history to the Italian merchants of the Middle Ages.1 Their merchant law included some rules on insolvency and, amongst them, a rule of proportional distribution.2 Importantly, exceptions to that principle have also existed since these early times. Italian cities of the Middle Ages taxed their merchants and the first insolvency priority was for tax claims.3 The earliest insolvency practises assimilated priorities invented by Roman law and French customary law and the state was able to impose their policies on the principles elaborated by the merchants. In the fifteenth century, when merchant law was incorporated into state law in Europe, the differences in priorities began to be significant because whoever held the priorities was dependent upon the political system. No longer were the priorities designed to suit the merchants’ needs but, more typically, were a political instrument exercised under the influence of pressure groups.4 In England the Crown’s ancient prerogative treatment rights also imposed an exception to proportional distribution.5
