THE PURPOSE OF BANKRUPTCY LAW

Document Type : Research Paper

Author

Assistant professor, Department of Law, Faculty of Social Science, Imam Khomeini International University, Qazvin, Iran

Abstract

The bankruptcy law is born in financial crisis. The legal rules of bankruptcy change the rule of nonbankruptcy law to reduce its negative effects. The main question is that what should be the basic purposes of bankruptcy law? We seek "what it should be?" Therefore, this research has an analytical method. The theories “Creditors bargain”, “Bankruptcy policy”, “Risk sharing” and “Rehabilitating values” has been raised in answer to this question. Study of these theories show that the purpose of bankruptcy law must be defined in two economic and social dimensions. The maximization of wealth is the purpose of economic dimension of bankruptcy law which emerges in the maximizing the value of existing property and maintaining the enterprise. In the social dimension, the optimal distribution of property is the purpose of bankruptcy law. There are two approaches to social dimension of bankruptcy. The first approach is that the distribution must comply with the agreement before the bankruptcy procedure begins. The second approach considers the distributive approach to the weak party of the bankruptcy.

Keywords

References

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Law Quarterly
Volume 50, Issue 2
August 2020
Pages 225-241

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