The digitalization of insolvency proceedings

Despite the international divergences existing in the design of insolvency law, there is a common feature of insolvency proceedings that, to a greater or lesser extent, is somehow universal: insolvency proceedings are generally costly and lengthy processes. For that reason, it is not surprising that a significant body of the literature on insolvency law deals with different mechanisms to make insolvency proceedings more efficient. This article examines how technology can contribute to that goal. To that end, it starts by reviewing how countries are deploying, or can deploy, technology in different aspects and stages of insolvency proceedings and how such digitalization of insolvency proceedings can significantly reduce the costs and length of insolvency proceedings. The article also examines how artificial intelligence (AI) and data analytics tools can be used for many other insolvency-related purposes that range from facilitating investigations, negotiations and alternative dispute resolution mechanisms in insolvency to providing advice and enabling the early detection of financial distress. The article concludes by examining how AI is expected to change the design and practice of insolvency law as well as the challenges that need to be addressed for a successful transition towards a technology-driven insolvency system.