The trade creditor's tale

Tarling, Richard David (2017) The trade creditor's tale. (PhD thesis), Kingston University, .


This thesis addresses the laws which typically affect the financial outcome for the trade creditor claimant in the insolvency of a corporate buyer. This outcome is only partially determined by the requirements of insolvency law itself, as pre-insolvency laws, in particular those relating to security, will typically play an important part in the outcome. The key laws addressed in this thesis (together with related principles, rights and policies) in so far as they determine the financial outcome for the unsecured trade creditor in insolvency are: the 'pari passu' principle together with the insolvency collective process; the priority rights obtained with security; the floating charge and, to a lesser extent, the fixed charge; the prescribed part levy and the policy of redistribution to unsecured creditors; the assignment of trade receivables and circumstances in which law implied trusts may be created (1). Collectively they will be referred to as the extended insolvency process. Whilst the laws do not constitute one process, as each has its own individual existence and authority, the laws will, nevertheless, be referred to as the extended insolvency process in order that the laws can be considered collectively. They are addressed in terms of the effects and outcomes they generate in insolvency and whether they can be considered fair and appropriate for the trade creditor, in particular the small and medium sized corporate trade creditor ("SME"). The thesis will contend that the operation of the extended insolvency process overall is unfair to trade creditors and that a policy of law reform should be implemented which will result in increased insolvency creditors. Proposals for law reform are raised. The author's contribution to knowledge is in his assessment of key company, trust and insolvency laws constituting the extended insolvency process, and their application from the perspective of the trade creditor claiming in insolvency, in particular the SME trade creditor; and in the provision of SME empirical data. 1. The expression law implied trusts is used distinction to express trusts, See Alistair Hudson, Equity and Trusts. Palgrave Great Debates in Law (Palgrave 2014) 29. The term law implied trusts will be applied elsewhere in this thesis.

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