Source: SSRN

This paper, authored by Felix Steffek from the University of Cambridge, explores how artificial intelligence (AI) will fundamentally alter the design and application of corporate insolvency law. Steffek argues that AI has the potential to resolve coordination problems in corporate financial distress by providing better access to both legal and non-legal data. However, the current legal frameworks are not equipped to handle these changes, and the author calls for reforms to make this data publicly available.

The paper suggests that the future of corporate insolvency law could become more flexible, shifting from mandatory rules to default provisions, depending on the availability of AI tools and the access different groups have to these technologies. While AI could streamline many aspects of insolvency proceedings, there will still be a need to protect certain groups, such as involuntary creditors, who may require specific legal safeguards.

Steffek concludes that AI will lead to a transformation in corporate insolvency law, making it less rigid and more reliant on advanced technologies that can analyze financial distress situations more efficiently.