Critical review of insolvency and bankruptcy laws

Nair, Jyoti (2025) Critical review of insolvency and bankruptcy laws. International Journal of Science and Research Archive, 15 (1). pp. 876-881. ISSN 2582-8185

Bankruptcy legislation plays a crucial role in ensuring economic stability by offering an institutional mechanism of handling financial distress. An effective insolvency framework provides confidence to investors and creditors. It is necessary for competitive credit costs, investment climate and economic growth. Insolvency laws provide solutions to distressed companies and help them turnaround to cash generating companies (Deb and Dubey,2020). However, complexities of regulation, high compliance costs and poor governance have often led to impediments in effective implementation of insolvency and bankruptcy laws (Finch, 1997). Efficiency of bankruptcy legislation varies significantly among economies, with resolution time being a key effectiveness driver. This paper critically examines bankruptcy legislation in major economies, comparing resolution time and overall performance. It offers a review of literature on existing research, conducts case studies, and examines the impact of variation in legal structures on economic recovery. Key parameters such as effectiveness of the judiciary, balance between creditor and debtor, economic impact, and regulatory flexibility are employed in measuring effectiveness.