The first part of this paper asks if the Creditors' Bargain Model, long employed by insolvency scholars as the starting point for many an analysis, can explain or justify even the most distinctive and fundamental feature of insolvency law. After examining the defining features of the model's construction, the role of self-interest and consent in it, and its ex ante position, it is concluded that the Bargain model can neither explain nor legitimate the coercive collective liquidation regime. The second part of the paper develops an alternative model to analyse and justify insolvency law. The starting premise is that all (but only) those affected by issues peculiarly governed by insolvency law are to be given a choice in selecting the principles which would determine their rights and obligations. Once these parties have been identified, they are to be given equal weight in the selection process, since their legal status (whether they are employees, secured or unsecured creditors, etc), wealth, cognitive abilities, and bargaining strength are all morally irrelevant in framing rules of justice. This part of the paper introduces the notion of a constructive attribute, characteristics this society accepts its citizens should have in their role as legislators. So all parties affected by insolvency issues are regarded as free, equal, and reasonable. The model sketched out in this part of the article requires all principles to be selected from its choice position. Here, all the parties are deprived of any knowledge of personal attributes, and must reason rationally. It is shown that parties in the choice position would in fact choose the principles laying down the automatic stay on unsecured claims. The paper concludes with the demonstration that because of the construction of the choice position and the constructive attributes of the parties bargaining in it, the principles chosen are fair and just, and chosen in exercise of the parties' autonomy. As it happens, they are also efficient.

This paper argues that the Enterprise Act 2002 has changed the way those dealing with distressed companies are required to behave much more significantly than most commentators realise. The motivation for this change lies in the ways in which administrative receivership is destructive of social value (in terms of unnecessary job losses and other resource misallocations). The paper identifies three such ways, all linked with the fact that receivership ties the office-holder's duties to the interests of the debtor's main bank. This is undesirable because the bank (a) is usually oversecured and thus has little incentive, once receivership is underway, to ensure that financially distressed companies would not needlessly be wound up or their businesses liquidated, (b) has the benefit of directors' guarantees, which weakens its incentives to ensure the maximisation of the value of the company's business even in those cases where its proprietary security is insufficient to cover what it is owed, and (c) has little incentive in either of these cases to control the costs of receiver wastefulness or negligence. These problems are compounded by the fact that the supply side of the market for banking services to SMEs is significantly monopolistic.In order to remedy these defects, Parliament has now imposed upon the administrator the duty to attempt a company or business rescue, as appropriate, if either one is in the interests of the creditors as a group. This duty is an objective one, is subject to the rationality test, and requires the administrator to account for his decision about which objective (company or business rescue) is to be pursued. The paper provides an understanding of company rescue consistent with the explicit text and legislative history of the statute, and discusses the importance of the quality of the company's pre-distress management to the administrator's decision about whether to attempt such a rescue.Finally, the mechanisms provided by the statue for an aggrieved party to hold the administrator to account are discussed. The paper highlights the importance of three factors. (a) Most administrators will be appointed by the company's main bank. (b) The Insolvency Practitioners

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