Bankruptcy and Order

This article argues that bankruptcy achieves order. It achieves not only commercial order, by regulating insolvent debtors and managing the collection and distribution of their bankrupt estates, but also order on many levels, including social and political order. From the 5th century BCE, when the first seeds of the idea of bankruptcy were planted in Republican Rome, through changes in outlook and approach to the present day, bankruptcy has acted as collective risk insurance protecting against the possibility of failure, while at the same time fostering business confidence. Although its underlying philosophy has changed over time, bankruptcy’s function of delivering order and predictability has remained consistent.