Insolvency law through the lens of property law theories

Property is inescapably at the core of insolvency law. Much of the latter involves property issues, such as: ascertaining the assets within the insolvent debtor’s estate; determining the property rights that various parties hold; and regulating the use and realisation of the insolvent’s property. Meanwhile, from the perspective of property law, insolvency offers a ‘litmus test’ for distinguishing property rights from mere personal rights. There is thus mutual dependency between property law and insolvency law. Despite this, the significance of insolvency is frequently neglected in property theory and, similarly, property theory is often overlooked in insolvency theory. The chapter will show that insolvency plays a defining role in property law and should therefore also be further integrated into formulations of property theory. Insolvency and its relationship with property are used to examine and challenge existing theories on the nature of property rights and to explore how theories focused on the purpose(s) of property could be applied in the insolvency context. Next, the chapter considers the extent to which insolvency theories adequately incorporate property and property theory. It highlights that some theories are more respectful of property rights than others (with the latter being more likely to allow for such rights to be overridden), but that many approaches to insolvency law would benefit from drawing upon property theory to achieve key objectives. A more joined-up approach to property and insolvency theory would be of mutual benefit and could more effectively shape both areas of law in the future.