Insolvency and the Recent Changes in the European Union to Question Essay

Insolvency and the Recent Changes in the European Union to Question Whether the Main Aim Is To Maximize the Collective Returns to Credit - Essay Example The researcher states that there have been some interesting changes to Insolvency law in the EU and subsequently in the UK to give more power to the Creditor. The aim, unlike other regulations, is to not to protect the consumer but to let the creditor maximize the collective returns to credit.   In most circumstances regime shopping within the EU is frowned upon, because there needs to be equality and protection for both parties under the law; however with insolvency law this does not seems to be the case in cross-border insolvency cases, especially with the definition of the centre of the debtor’s main interest (COMI). This concept of COMI has been used to allow the more powerful creditor to choose the regime that best suits their needs to maximize their return on credit. In the US insolvency law seems to more geared towards the creditor regaining their money back, because in good faith they have lent it out. Jackson argues that the assets of the individual should be pooled together and divided amongst the creditors on the strict economic basis to maximize the return of credit to the creditor. This would mean that the laws that offer this maximization of credit should be applied, even if there are different jurisdictions because the debt crosses state or international borders. Therefore this will be illustrated as the approach taken by the EU in regard to the new trans-border insolvency regulations, rather than individual actions for each creditor in differing jurisdictions. The enforcement of individual creditors needs versus the individual debtor's needs is the soft approach that the UK system of law takes and NOT in the best interests of creditors because they should be able to get the maximum return of credit because they are already a loss. Jackson argues this hard economic approach, rather than an approach that considers the interests of the debtor. This is fair because the creditor in good faith has lent this money to the debtor expecting its r eturn; therefore in the case that this is not possible the maximization of this return should be available.