New Trends in Modern Bankruptcy Laws: An Economic Vision with New Legal Ideas
Dr. Abdulaziz Bukhars
Associate Professor of Business Law
Head of the Department of Private Law
Faculty of Law and Political Science
University of Mohammed Boudiaf – Messila – Algeria
For a long time, bankruptcy laws have aimed at the overall objective of protecting credit by punishing the debtor for the misuse of business activities, i.e. ceasing to meet his/her obligations, by ensuring that creditors’ repayments are paid through the establishment of a collective approach and a type of equality to face this issue. However, both reality and the practical practices of many countries have proved the ineffectiveness of the system’s objectives in maintaining the stability of the commercial, social and economic field. This has led many Western countries, followed by some Arab countries, to review their laws in this field by setting new objectives, mainly the preservation of economic institutions as an economic actor, against the backdrop of the worsening of global economic crises. Thus, the socio-economic tendency in these new laws was clear.
This vision had an impact on legal ideas that remained stable in the old bankruptcy laws, and in the general rules of law; for example, the devolution of damages resulting from claims initiated by the creditors’ representative to the financial liability of the debtor’s institution rather than the creditor. At first glance, this rule seems strange, illogical and inconsistent with general rules that some jurisprudence even questioned its constitutionality. On the one hand, the creditors’ representative acts on behalf of and in the interest of the former, while on the other hand, the proceeds of these proceedings are due to the financial liability of the debtor. Another example is modern bankruptcy laws’ implementation of a principle that was not known in law, which is “the principle of the irresponsibility of banks providing credit.” This principle provoked a lengthy legal debate, especially in French jurisprudence, regarding its constitutionality, as it contradicts the right to compensation for those who suffer damage as a result of the credit process.
The aim of this study is to examine the new trends of contemporary bankruptcy laws, in light of the fundamental question of: How adequate are the new economic and social objectives of contemporary bankruptcy laws as justifications for departing from the usual rules and solutions prescribed in this field, and in the general rules of law? What is the need for such a new vision in Arab legislation in light of the current economic crisis?
Keywords: Bankruptcy, judicial settlement, cease to pay, collective procedures, ailing institutions, difficulties of contracting.