Power, choice, exposure and fragility: Reframing fairness in equity for the corporate and insolvency sphere

Abstract

Where is the place of humanity in current corporate and insolvency frameworks and their theoretical underpinning? How can it be assured that the institutions that have been invented through human ingenuity and brilliance serves the collective human experience fully and equitably? Insolvency law has long been theoretically conceptualised on the basis of legal and contractual entitlements with the core purpose of maximising returns to the creditors owed by the debtor during its financial distress. With the onset and steady growth of the rescue culture with its acknowledgment of the broader impacts of insolvency on society and the economy, the simple creditor wealth maximisation approach does not provide equitable solutions for all of the stakeholder associated with the debtor company. In particular, involuntary, non-adjusting, and undiversified creditors, such as employees, tort creditors, and the environment, are often with little recourse and few opportunities for participation at the negotiation table. These stakeholders suffer from greater exposure and fragility in their corporate relationships with little power or choice on that relationship and its impact on them. If theories are devised with humans in mind, it may be possible to redress the inequity in fairness by changing the way we view financial distress and the broader purpose for resolving it. This article seeks to reframe the way fairness is assessed and applied to achieve equitable solutions in the corporate and insolvency sphere by examining it through a feminist jurisprudential lens, with a particular focus on Martha Fineman's Vulnerability Theory.