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passage 2
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
6.
Which one of the following ████ ██████████ █████████ ███ ████ █████ ██ ███ ████████
a
The modern trend ██ ██████████ ███ ████ ████ ██████████ ███ ██████ ███ ███████████ ██ ████████ ████████ ██████ ███ ████ █████████ ██ ███████ ███ ██████ ███ ██ ██████████
b
Bankruptcy laws have ███████ ██ █████ ██ ████ ███ █████ ██ ██████████ ███ ██████ ██ ███ █████████ ██████████ ████████ ██ ███████ ████████ ███ █████████████ ████████████
c
Modern bankruptcy laws ███ █████████ ██ ████████████ ████████ ████ ██████ ███ ███████ ████████ ████████ ███ ████ ████████████ ██████████
d
Punishment for debt ██ ██████ █████ █████████ █████ ███ ███████ ███ ██ █████████ █ ███████ ████ ███ ████ ███████ █████████ ██ ████████████
e
Greater economic interdependence ███ █████████ ███ █████████ ██ ██████████ ████ ████ ███████ █ ███████████ ██ ███ █████████ ██ ███████ ███ ██████████