Prof. Jacob Ziegel - "Canadian bankruptcy law is out of date"

This commentary was first published in the Financial Post on March 10, 2009.

Every modern society needs a balanced, well-functioning insolvency law to take care of the inevitable casualties of a free-market economy. This is true even when the economy is buoyant. It becomes imperative when the economy is in recession with bankruptcies mounting.

Insolvency law has two major goals. The first is to provide an orderly procedure for the liquidation of insolvent estates and distribution of the proceeds among the debtor's creditors in a prescribed order. The second goal is to enable viable enterprises to restructure their affairs so as to save jobs and stay in business and, in the case of individuals, to enable them to compromise their debts and avoid the stigma of bankruptcy.