Insolvency practitioners (IPs) play a crucial role in managing and liquidating bankrupt estates. While their primary duty is to serve the collective creditors, they must also consider various societal interests. However, the discretion granted to IPs leads to inconsistencies in decision-making, legal uncertainty, and inequality in bankruptcy proceedings.
The latest article, “The IP Lottery: The Role of Noise in Balancing Creditor and Stakeholder Interests in Insolvency Proceedings,” introduces the concept of noise—unwanted variability in judgments that should be identical—and demonstrates, using empirical studies from the Netherlands, how stakeholders in bankruptcy cases are affected by subjective and inconsistent decision-making by IPs.
To enhance legal certainty and fairness, they argue for greater clarity and guidance on how IPs should balance competing interests in insolvency proceedings.
Read the full article in the European Insolvency and Restructuring Journal here!
