Self-study
P1
In many Western societies, modern bankruptcy laws have undergone a shift away from a focus on punishment and toward a focus on bankruptcy as a remedy for individuals and corporations in financial trouble—and, .
Intro to Topic ·
Modern bankruptcy laws
No longer about punishment. About remedying the financial situation for the debtor and creditor.
Increased Bankruptcies Declared ·
This has been criticized
Main Point ·
Do not abandon modern bankruptcy laws
Their increased use is not a reason to abandon them. They serve a useful economic purpose.
P2
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Old Solution ·
Imprisonment and dissolution
Punishment was thought to be the right solution to insolvency because debtors were violating "sacrosanct" social contracts.
Critique ·
This benefits no one
Creditors can't get paid if the debtor is in jail. A dissolution of a company would cause unemployment.
P3
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New Solution ·
Modern bankruptcy law
Two Rationales ·
(1) Public good is paramount and (2) that's better served by allowing the debtor to continue to operate
Mechanism ·
Court-directed reorganization of debt
Some debts forgiven; some assets transferred to creditors.
Punishment ·
Bad credit score
A bit of punishment is still there, but the point is to benefit society
Goal ·
Restoration of healthy economic activity
Passage Style
Critique or debate
Problem-analysis
12.
The information in the passage ████ ████████ ████████ █████ ███ ██ ███ █████████ █████ ███████ ██ ██████████ █████
a
Bankruptcy laws always ██████ ████ ███████ ███████ ██ ██████████ ████████ ██ ██████ ██████ ██ ███████
Too strong. We don’t know bankruptcy laws “always” result from.
b
Changes in bankruptcy ███ ████ █████████ ██ ███ ██████ ███ ████ ██████████ ███████ ██ ████████████
Not supported, because we don’t know that legislators only “grudgingly” adopted the changes. We have no evidence of legislators’ reactions to the new laws. We also don’t know that the courts started the changes in laws.
c
The adjustment of ██████████ ████ ████ ████ █ ████████ █████ ███ ██ █████ ████████ ███████ ██ ██████████
Not supported, because we don’t know that creditors “bitterly opposed” the changes. Perhaps we might be able to say that at least some creditors might not have favored the changes, but even if that were supported, we don’t have evidence of an especially harsh, “bitter” opinion.
d
Bankruptcy laws underwent ██████ ███████ ███ ███████████ ████████ ██████ ██████████ ███ ████████ ██ ███ █████ ██ ████████
e
The shift away ████ █ ████████ ████████ ██ ██████████ ███ ████ ██ █ ████ ███████ █████ ██ ███████ ██████ ██████████████ ███ ████ ████ ████████████
Not supported, because we don’t know about general trends in society.