DOI: 10.1002/iir.1518 ISSN: 1180-0518

Is insolvency stigmatised?

Emilie Ghio, Donald Thomson
  • Law
  • Finance

Abstract

It is a commonly held belief that there exists a sense of stigma around insolvency, which explains the low uptake of rescue procedures in the United Kingdom and around the world. We assess the accuracy of this claim through two qualitative studies. The first is conducted through interviews with corporate directors in the United Kingdom. The second study is a comparative literature review in selected jurisdictions. The literature review reveals a prominent stigma narrative in policy and legal texts, whereas the interview data reveal only moderate levels of stigma. Rather, they indicate that a lack of knowledge and understanding of insolvency (concept, law and procedures) may be a more powerful factor in explaining why corporate directors do not file for rescue procedures.

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