The title of this short post is a line from a Rudyard Kipling poem, The English Flag.
I’m reminded of it having just completed a project with Professor Jason Kilborn of John Marshall Law School comparing creditor-initiated bankruptcy in the United States, the Netherlands, and my home jurisdiction of England and Wales. For years, I took it for granted that creditors typically use bankruptcy process as a thinly disguised mechanism for collecting debts. This is because the practice of creditors leveraging collection by threatening to bankrupt the debtor is commonplace in England and Wales. I just extrapolated what I knew from my little corner of the world and assumed that everyone else behaved the same way. Not so. When it comes to creditor-initiated bankruptcy, we English are outliers and our law and practice is entirely at odds with bankruptcy theory and with law and practice in the US. For the full story see the paper Jason and I just finished entitled “Involuntary Bankruptcy as Debt Collection: Multi-Jurisdictional Lessons in Choosing the Right Tool for the Job” . The abstract reads:
This paper contrasts the usage of creditor-initiated or ‘involuntary’ bankruptcy in England, the Netherlands and the United States, and it presents empirical evidence to reveal and explain stark divergences among these three otherwise very similar systems. US practice is consistent with the hypothesis that involuntary bankruptcy should represent a rare exception to the ordinary process of individual claims enforcement. Elevated levels of involuntary bankruptcy in England and the Netherlands pose a theoretical and practical conundrum. Analysis of empirical data suggests that involuntary bankruptcy is commonly used in England and the Netherlands for deleterious purposes inconsistent with the modern goals of bankruptcy. These discoveries suggest that policymakers should consider restricting involuntary bankruptcy in a variety of ways, especially against individual, natural person debtors.
In short, I’ve learned a lot about my own jurisdiction by looking at it afresh through outsider’s eyes.