ABSTRACT
This Part of the text is concerned with the circumstances in which a bankruptcy or liquidation can be avoided despite the fact that the debtor is or is nearly insolvent. A general recognition that where possible this is to be encouraged is often referred to as ‘the rescue culture’.1 This phrase is particularly used in relation to companies, where it is usually understood to mean that there should be an attempt to enable businesses to continue as going concerns in preference to selling assets on a break-up basis. The rescue culture serves social objectives in that it will usually be in the interests of everyone, particularly employees, involved with a business that the business should survive; it will also usually benefit creditors, since the liquidation process is likely to diminish the value of the assets, whereas creditors will often receive a better return over time where the company survives as a going concern. In recent years, the ‘rescue culture’ has been joined in the UK by the ‘enterprise culture’ with its notion, imported largely from the United States, that willingness to risk failure is a concomitant of the entrepreneurship necessary to create wealth and employment: ‘in a dynamic market economy some risk taking will inevitably end in failure.’2 The priority is to rescue where possible but, where this is not possible, to ensure that the consequences of failure are not so dire that they deter responsible risk-taking. The next few chapters address the issue of facilitating rescue, whilst Part IV considers the difficult balance between encouraging responsible risk-taking whilst maintaining public confidence in the insolvency system as being one under which those to whom credit is extended are not too lightly released from their obligation to pay.
