An Analysis of the Multiple Aims of Insolvency Law: From the Internal and External Perspectives

With the development of the insolvency legal system, protecting creditors’ rights and interests is no longer the sole purpose of insolvency law. Conversely, the aims of insolvency law have shown a trend of diversified development. In contrast to the traditional view that the sole purpose of insolvency law is to protect the rights and interests of creditors, this paper argues that each of the multiple purposes of insolvency law has a distinct value and is not a by-product of the primary purpose of protecting creditors. This article groups the aims of insolvency law into two categories: internal and external. The insolvency law’s internal purposes include establishing the insolvency system’s commercial and legal attributes, protecting the rights and interests of creditors, and establishing an effective mechanism for assessing the viability of a business. The insolvency law’s external purposes include protecting employees’ rights and ensuring the rational allocation of resources to avoid creating plenty of zombie companies. These various aims of insolvency contribute to improving the insolvency system, demonstrating the legislative purpose and the response of insolvency law to judicial practice.