The Forgotten History of Bankruptcy, 1543–1624

Abstract

ABSTRACT This article examines the foundations of bankruptcy law in England. Rather than looking at the bankruptcy statutes that were aimed at fraudulent insolvent debtors, it analyses debt settlements of honest insolvent debtors awarded by the court of Chancery between 1543 and 1628. It shows that these agreements were not only aimed at relieving creditors, but also financially rehabilitated debtors if they had become insolvent for reasons beyond their own control. Most debt settlements in the period were awarded following a bill of conformity procedure, in which a minority of creditors could be forced to agree to a settlement. Up to 1621 it was standard practice for debt settlements to include financial rehabilitation. The Chancery ordered delay of payment, part and full discharges of debts or alternative payment plans. Political struggles and fraudulent practices in the early 1620s ended this highly pragmatic practice, which was only to be restored centuries later.