Theorising About Insolvency Law and the Public Interest in the Context of Insolvent Utilities: An Australian Perspective

Abstract

The insolvency of a privatised utility raises problems of balancing the general public's interest as consumers of the essential service and the interests of other stakeholders particularly creditors. One mechanism of dealing with this conflict is to incorporate the notion of the public interest within insolvency regulation. This article discusses theoretical justifications for incorporating public interest issues into insolvency law when dealing with insolvent utilities. The article argues that while that the indeterminacy argument provides a strong rationale for refusing to open up insolvency law to all interests that might have a nexus to financial distress of ordinary trading companies, the special nature of essential services tips the balance in favour of a limited use of the public interest within insolvency regulation of utilities. One problem with incorporating the public interest within regulation relates to definitional difficulties and the article discusses the different ways in which theorists have approached the problem of providing a coherent basis for identifying the public interest. The article identifies 6 elements that may comprise the public interest in utility insolvencies.