Justice driven insolvency law

Various insolvency theories have sought to justify the legitimacy of insolvency law. While the three canonical theories arrived at their central claims through different methods, they share a broadly functionalist orientation and common core: insolvency as a form of social cooperation. Where they diverge is in the normative commitments they attach to that core and in the methodological approaches that give rise to them. Baird argues that the divide may possibly only be resolved with aesthetics and morals, while Gross contends that existing theories fail to articulate the philosophical basis of their claims, leaving the field without a fully developed account of its normative foundations. This article responds to these challenges, and broader question of insolvency’s legitimacy, by advancing a conceptual-normative analysis of insolvency law. Rather than asking what insolvency law exists to, it asks what legitimises the coercive cooperation required under conditions of moderate scarcity and what normative consequences follow from those conditions. On this basis, the article develops Justice-Driven Insolvency Law (JUDIL), grounded in Rawlsian fairness and Deweyan Pragmatism. It argues that all insolvency theories are underpinned by implicit theories of justice, which provides the common ground on which they can be fully assessed. In doing so, it reframes the central debate in insolvency theory from one of efficiency versus justice to one of competing conceptions of justice.