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Unit information: Insolvency Law in 2021/22

Unit name Insolvency Law
Unit code LAWD30104
Credit points 20
Level of study H/6
Teaching block(s) Teaching Block 4 (weeks 1-24)
Unit director Mr. Furey
Open unit status Not open

LAWD10008 Law of Contract or LAWD10007 Foundations of Business Law



School/department University of Bristol Law School
Faculty Faculty of Social Sciences and Law


When debtors are unable to pay their debts in full, the law provides a means by which the insolvent estate is dealt with (bankruptcy in the case of individuals, liquidation or administration in the case of companies) and rules which determine how the estate is distributed among competing creditors. Creditors’ claims may arise, for example, under contracts of loan, sale, lease, employment, etc.; as a result of liability in tort; or, under statute, to tax authorities or environmental agencies etc. This unit examines how these competing claims are balanced and how contracts are often drafted with the aim of improving the protection of one party in the event of the other party to a contract becoming insolvent. Also involved in the balancing exercise, in the case of individual debtors, are the claims of the debtor and the debtor’s family.

Topics covered in the unit

1. Procedure in liquidation, bankruptcy and administration (in outline only)

2. The two fundamental principles of insolvency law. The first of these is the property principle (or anti-deprivation rule) which states that all the debtor’s property forms part of the debtor’s estate; the second is the distribution principle which states that creditors of the same rank share pari passu (or rateably according to the size of their debt) in the distribution of the debtor’s estate. The existence of these fundamental principles is established by the case law decisions preventing parties from contracting out of them.

3. The distribution of the estate which involves rules relating to which creditors’ claims are accepted (proof of debt, a critical aspect of which is set off where debtor and creditor have cross claims against each other) and the ranking of creditors’ claims (secured claims, preferential claims, deferred claims).

4. The role of trusts in insolvency.

5. Claims to damages and insurance proceeds.

6. Disclaimer of onerous property.

7. The effect of bankruptcy, liquidation or administration on contracts of the debtor.

8. The realization of the debtor’s interest in the family home; the effect of bankruptcy on pension entitlements.

9. Adjustment of pre-insolvency transactions such transactions at an undervalue and preferences.

10. Liability for fraudulent or wrongful trading in relation to companies.

Intended learning outcomes

By the end of this unit a successful student will be able to:

1. Demonstrate an understanding of how insolvency law is based on certain fundamental principles and critique decisions of judges and academic views in the light of these principles.

2. Through the case law method of study become confident in own ability to independently study law and approach new and unfamiliar areas of law confident of being able to understand them for themselves.

3. Demonstrate an understanding of how the threat of insolvency plays a part in the drafting of contracts.

4. Build on, reinforce and synthesise knowledge of principles learned in tort, contract, land law and trusts in the context where one party to a transaction has become insolvent.

5. Evaluate policy options for the reform of insolvency law, for example, in terms of promoting the rescue of viable but insolvent businesses while respecting the sanctity of contracts, or, in balancing the interests of the debtor’s creditors with the needs of the debtor’s family.

Teaching details

Teaching will be delivered through a variety of asynchronous and synchronous activities

Assessment Details

1 x summative assessment: Timed Open Book Assessment with a specified word count (100%)

The assessment will assess all of the intended learning outcomes for this unit.


If this unit has a Resource List, you will normally find a link to it in the Blackboard area for the unit. Sometimes there will be a separate link for each weekly topic.

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