Abstract
Several jurisdictions in the Commonwealth Caribbean have undertaken reform and modernisation of their insolvency legislation. The dominant model for the new enactments has been Canada's federal statute, the Bankruptcy and Insolvency Act, RSC 1985, which has already been transplanted into six jurisdictions of the region. The transplantation has introduced lexicon which, while part of the vocabulary of the old statutes for personal insolvency, has, traditionally, been unfamiliar to the region's corporate insolvency law, hence the phrase, ‘“old–new” lexicon’, in the title. This article examines the meanings of some of this lexicon, particularly ‘bankruptcy’ and cognate terms, including ‘acts of bankruptcy’. The examination extends to the term ‘receiving order’, operationally related to bankruptcy. Legal interpretation of the terms is enriched in the discussion by insights from linguistics. While showing that the importation of these terms into the region's corporate insolvency law is semantically problematic, the article elucidates the signification of the terms. It points out that some of the ‘old–new’ terms may tend to reduce the efficacy in the contemplated lay administration of the statutes. It also warns that the ‘old–new’ lexicon threatens to undermine key goals of the reform exercise, suggesting a need for deeper scrutiny in the transplantation process.
Introduction
With the twenty-first century has come a wave of corporate insolvency law reform in the Commonwealth Caribbean. The ripple of reform began in Barbados (Bdos) in 2002 and gathered momentum with seven other territories of the region, up to the time of writing, enacting major changes to their traditional framework for corporate insolvency. 1 The latest enactment has been in Antigua and Barbuda, which, in a 2020 amendment to its Companies Act, added extensive provisions enabling the rescue and rehabilitation of financially distressed entities. With the exception of the Antigua and Barbuda and the British Virgin Islands enactments, the blueprint for the reform statutes has been Canada's federal statute, the Bankruptcy and Insolvency Act, RSC 1985.
The borrowing or adoption of foreign models of law into a country's legal system has been described as legal transplantation. 2 Caribbean territories settled or conquered by the British are accustomed to this process of transplantation of law from England, whether by virtue of the doctrine of reception 3 as an incidence of colonial intervention, or by ‘verbatim adaptation’ 4 of English enactments by local legislatures during and post the colonial era. The use of Canada's Bankruptcy and Insolvency Act as a model for modern insolvency law statutes in the Commonwealth Caribbean represents a departure from the traditional source of legal transplants. However, English bankruptcy law has historically influenced Canada's insolvency law which has evolved with the incorporation of new features by the Canadian Parliament over time. 5 The Canadian model now being adopted by several territories of the Commonwealth Caribbean may be said then to be a cross-fertilised transplant. It is perhaps therefore more accurate to say that the use of Canada's Bankruptcy and Insolvency Act as a pattern for the modern insolvency enactments in the Commonwealth Caribbean departs from the historical direct reliance on English law. 6 The use of the Canadian insolvency law model continues a fairly recent trend in some territories, particularly in the field of corporate and commercial law, of drawing on Canadian legislation in the law reform and revision process. 7
The cross-fertilised transplant has brought into corporate insolvency law vocabulary traditionally exclusively associated with the legal regime for individual insolvency in the Commonwealth Caribbean. This is because Canada's Bankruptcy and Insolvency Act, having had its roots in an English statute which dealt only with individual insolvency, was made applicable to both personal and corporate insolvency in Canada. 8 The Commonwealth Caribbean jurisdictions which have adopted the Canadian model seem to favour this unified approach 9 and repealed their respective personal insolvency legislation 10 when their modern insolvency statutes took effect. These statutes on personal insolvency date back to the late nineteenth and early twentieth century. They were themselves grounded in old versions of English bankruptcy enactments, bearing some similarity to the English statute in which Canada's Bankruptcy and Insolvency Act has its heritage. As a result of the adoption of the Canadian model in the reformatory effort and despite the repeal of the old bankruptcy statutes, the lexicon of personal insolvency law has infiltrated corporate insolvency law in some Commonwealth Caribbean territories.
This article examines the retention of old lexicon in the modern insolvency statutes of the Commonwealth Caribbean which have been transplanted from Canada. Terms such as bankruptcy and its cognates, receiving order and proposal are some of the lexical items that have been imported into the lexicon of corporate insolvency. The discussion focusses largely on the lexeme, bankrupt, and cognate terms and, to a lesser extent, examines the term, receiving order, which is operationally related to bankruptcy. With the aid of insights from linguistics, this article investigates the meanings of these terms and explains the boundaries of their meanings in the context of the modern legislative schemes. The discussion thus clarifies the scope of the meaning of bankruptcy and cognate terms in the modern insolvency statutes of the Commonwealth Caribbean. It also suggests a potential confusion surrounding the term, receiving order, in the context of corporate insolvency. The semantic analysis of the acts of bankruptcy illustrates that the notion of culpability on the part of the debtor inheres in the description of various acts, despite the debtor's lack of control in several situations contemplated by the acts of bankruptcy. The discussion urges a shift away from this reliance on blame attribution to a direct focus on the debtor's financial condition in order to engage the bankruptcy process. In addition, it is argued that spotlighting the debtor's culpability for the insolvency in order to initiate the bankruptcy process contributes to a retention of the traditional stigma associated with bankruptcy, and indeed imports this stigma into the law of corporate insolvency. This runs counter to the aim of avoiding bankruptcy stigma with a view to removing a social obstacle to the appropriate use of bankruptcy legislation. The discussion ultimately raises questions about the degree of efficacy of the legal transplantation process in law reform and modernisation.
‘Old–new’ lexicon
The compound adjective, ‘old–new’, is used to qualify the nature of the items of vocabulary which will be highlighted in the discussion. The items are ‘old’ in the sense that they have been lexical features of the traditional law on personal insolvency and are familiar to insolvency practitioners in the Commonwealth Caribbean. But the items of vocabulary are also ‘new’ in the sense that their meanings have been somewhat altered in the transplantation process – old lexical items have acquired extended or new meanings in the context of corporate insolvency. ‘Old–new’ represents an adaptation of the term, ‘new–old’ used by Robinson 11 to describe laws which, though contemporary and reformative, still clutch steadfastly to aspects of colonial laws. She argues that ‘new–old’ law is indicative of disputed or competing values in the polity which are played out in laws which are dichotomous in character. In her article, the focus is on the content of the new law. It could be argued that some of the modern insolvency law enactments have retained substantive aspects of old law 12 and may thus be said to fit within this paradigm of ‘new–old’ laws.
The focus in this chapter, however, is not so much on the substance of the new law, but on certain lexemes deployed in it. This discussion then takes a lexicosemantic approach, highlighting old terminology which now have extended or new legal meaning, some of which are potentially confusing. In addition, it interrogates the suitability of engrafting new signification on old terms in the context of some of the objectives sought to be achieved by the legislature in promulgating modern insolvency statutes across the Commonwealth Caribbean. This interrogation taps into linguistics and the sociology of language, and suggests that the old–new lexicon of the modern insolvency statutes, beyond the legal meaning it imports, is perhaps reflective of the nature of prevailing social attitudes to insolvency.
Bankrupt and cognate terms
In several of the modern Canadian-influenced insolvency statutes of the Commonwealth Caribbean, the lexeme, bankrupt, is, under the interpretation provisions of the respective statutes, 13 defined as ‘a person who has made an assignment’ or a person ‘against whom a receiving order 14 has been made’. The cognate lexeme, bankruptcy, is not specifically defined in the statutes but is taken to refer to the legal collective procedure which follows an assignment, or a receiving order by the court. Under this procedure, the bankrupt's assets are gathered and distributed among creditors who prove for the debts owed to them. In keeping with the scope of application of the statutes, the term ‘person’ in the definition of bankrupt extends to a corporate entity. It is in this regard that the meaning of the term and its cognates, bankruptcy, bankruptcies, has been extended beyond its traditional signification in bankruptcy law which did not overall apply to entities registered under the companies legislation. 15 Prior to the enactment of the modern statutes in the Commonwealth Caribbean, a company could not technically be described as bankrupt or as having entered into bankruptcy since these terms were confined to individuals who were subject to the legal procedure under the relevant bankruptcy statutes.
Under the traditional corporate law framework, corporations which were being wound up, for whatever reason, were described as being in liquidation – a generic term for the process via which the assets of a company are realised and distributed to creditors and members with a view to corporate dissolution. A liquidation by way of a creditors’ voluntary winding-up, or by way of a compulsory winding-up on the ground of inability to pay debts denoted an insolvent liquidation. 16 Modern insolvency law enactments which have largely also provided for the repeal of companies acts’ provisions permitting insolvent winding up, have generally supplanted these types of insolvent liquidation with bankruptcy. With the apparent exception of Trinidad and Tobago, 17 insolvent liquidations of companies must occur under the bankruptcy provisions of the modern insolvency statutes.
The traditional semantic distinction in law between bankruptcy and winding up seems to have been at play in the Jamaican case, The Trustee of the Estate of Cuddy’z Franchise One Limited and Courjon Investments Limited, Bankrupts v Access Financial Services and National Peoples Cooperative Bank Jamaica Limited. 18 Decided under the modern insolvency legislation, the case involved companies that had entered bankruptcy by way of a deemed assignment. 19 The old semantic distinction between bankruptcy and winding up appears to have contributed, in part, to the respondent’s contention that the winding up of the bankrupt companies had not commenced for the purposes of section 93 of the Companies Act. This section of the Companies Act provides that charges to which the Act applies are void against a liquidator if they have not been registered with the Companies Registrar prior to the ‘commencement of the winding up of the company’. The respondents had failed to so register their charges up to the time that the companies became bankrupt by assignment. They argued that since the corporate entities had not undergone any of the procedures via which winding up began under the Companies Act, the winding up process could not be said to have been initiated, even though the entities were bankrupt by assignment under the Insolvency Act. 20 This argument reveals a lingering conceptual separation between bankruptcy and (insolvent) winding up. The court clarified the position in law by explaining that bankruptcy by assignment is a mode of winding up that was created by the new legislative regime for insolvency which now had to be invoked once inability to pay debts constituted the basis for the winding up or liquidation. 21 As previously noted 22 though, the position in Trinidad and Tobago seems to be somewhat different because it has retained provisions for insolvent winding ups under its companies legislation even though its Bankruptcy and Insolvency Act provides for corporate bankruptcy. This statutory duality in the corporate insolvency process implies some legal distinction between insolvent winding up achievable under the (Trinidad and Tobago) Companies Act, and bankruptcy under the Bankruptcy and Insolvency Act. 23 The nature of the distinction, however, is unclear.
It is notable that the semantic expansion in law of the word bankrupt and its cognates, bankruptcy, bankruptcies, brings it closer in line with how it is ordinarily used in the Commonwealth Caribbean in reference to financial condition. A search of the word, bankrupt, in the archival records for the decade of the 1990s of a daily newspaper
24
circulating in Jamaica generated nearly 450 records, inclusive of cognates. Of these, some 300 records used the lexeme or its cognates to denote a ruinous financial condition.
25
Many of these 300 records refer to bankrupt businesses, firms, financial institutions or entities. There are, though, at least thirty instances, referring to circumstances in the Commonwealth Caribbean, where the word, bankrupt or its cognates, have been used specifically in respect of a company or companies. By way of examples, I cite the following records from issues of the newspaper:
Any private company would have been placed into bankruptcy who was in that position.
26
In a bleak outlook for the new year, Mr – predicted that without the Social Partnership, more companies would go bankrupt.
27
The Office of the Trustee in Bankruptcy reports presently handling about 17 bankrupt companies and/or individuals.
28
It is clear then that in Standard Jamaican English the lexeme, bankrupt, is used in respect of both companies and individuals. While this ordinary usage overlaps with the new technical meaning in law, it is noted that, in ordinary usage, the meaning of bankrupt is not necessarily confined to a person (company or individual) in respect of whom legal process has formally commenced under the relevant statutory procedures. The ordinary meaning may include general financial ruin so that bankrupt may refer to a person who is financially over-extended and incapable of satisfying his, her or its liabilities, without importing that the person is subject to the legal procedure. This semantic extension in ordinary usage explains as well the use of the term in connection with industries as a whole,
29
governments
30
or countries,
31
all of which may not be said to be bankrupt in the technical sense signified under the various insolvency statutes. These two layers of meaning are reflected in the Oxford Dictionary which cites both the technical meaning of being subject to the relevant legal process as well as the wider meaning of severely insolvent or financial ruin for the entry, bankrupt.
32
Early awareness of these meanings is likely to avoid confusion for beginning students of insolvency.
New students of comparative insolvency law who are navigating a range of sources of laws and materials, including US sources, should also be mindful that the lexeme, bankruptcy, in US law imports a wider meaning than that signified by the term under the modern insolvency statutes of the Commonwealth Caribbean. In US law, it is a catchall for the gamut of legal procedures available for financially distressed debtors under the US Bankruptcy Code. Among others, it captures the liquidation procedure under Chapter 7 of the US Bankruptcy Code, as well as the relief offered by the reorganisation procedure under Chapter 11, hence the term, Chapter 11 bankruptcy. However, a state of insolvency is not a legal condition precedent for a voluntary petition for relief under Chapter 11. Under the new statutes of the Commonwealth Caribbean, bankruptcy refers only to the liquidation procedure applicable to an insolvent person which may be achieved by way of a receiving order 33 by the court, or by way of assignment.
The goal of the US Chapter 11 bankruptcy procedure is rehabilitative. 34 The corresponding procedure under Commonwealth Caribbean insolvency statutes of US Chapter 11 bankruptcy is the proposal 35 regime. This rescue regime under reformed insolvency statutes of the Commonwealth Caribbean provides financially ailing businesses with a recourse other than bankruptcy, and it arguably accounts for the short title ascribed to the various Canadian-modelled enactments, which, save for Jamaica's, is the Bankruptcy and Insolvency Act. Under these statutes of the Commonwealth Caribbean, a debtor under a proposal regime will, generally, be insolvent but need not be bankrupt. 36 Thus, unlike in the US where bankruptcy may be considered a generic term for the various legal procedures under the Bankruptcy Code, the lexeme in the new statutes of the Commonwealth Caribbean is technically confined to the legal procedure which primarily envisages liquidation of the assets of an insolvent, and distribution of the proceeds, as far as possible, to creditors whose claims have been proven in the bankruptcy. The title and scheme of most of the modern statutes in the Commonwealth Caribbean reflect the strict boundaries of the legal meaning of bankruptcy in that, in addition to the rules governing the insolvent liquidation procedure, that is, bankruptcy, the statutes provide other legal avenues for insolvent debtors who may not be considered bankrupts in the strict sense. In both US law and the law of the Commonwealth Caribbean territories with Canadian transplants, the lexeme, bankruptcy, refers to legal procedures but in the latter jurisdictions, the meaning of the term is more restricted than in the US. It should also be borne in mind that notwithstanding the modern trend in the law of the Commonwealth Caribbean for the term to cover both individuals and companies, there remain jurisdictions whose insolvency laws retain a statutory bifurcation between bankruptcy as traditionally conceived, that is, the legal insolvency regime available for natural persons on the one hand, and the legal insolvency regime for corporations on the other hand, typically provided for under companies legislation. 37
Acts of bankruptcy
Transplantation of the Canadian model of insolvency law has also drawn into the vocabulary of Commonwealth Caribbean corporate insolvency law the curious term of art, act(s) of bankruptcy. As will be argued in this part, the concept appears to be unnecessary in the scheme of the modern statutes. Additionally, the discussion in this part relies heavily on semantic analysis, particularly on the concept of agentivity. It illustrates how blameworthiness of the debtor is inherent in the statutory language that describes what constitutes acts of bankruptcy, and suggests that this is an inappropriate foundation for triggering the bankruptcy process which should focus directly on the financial state of the debtor.
The term, acts of bankruptcy, implies that something must be done by which the debtor may be adjudged bankrupt. These acts of bankruptcy are itemised in the various statutes 38 and largely constitute conduct engaged in by a debtor. 39 The acts include positive action motivated by fraudulent intent, evasive action, admission, as well as omission. An act of bankruptcy is crucial in the context of involuntary bankruptcy. Mere insolvency, while sufficient for an application for voluntary bankruptcy by assignment, may not be sufficient to ground an application for a receiving or bankruptcy order; it must be shown that at least one act of bankruptcy has been committed by the debtor. This is in stark contrast to the traditional law relating to corporate insolvency under which the basis for an insolvent winding up was the financial state of the company – its sheer inability to pay debts – rather than an act on the part of the company which may intimate that it is a proper candidate for insolvent liquidation.
It is submitted that the introduction of the term, act of bankruptcy, and its signification bring unnecessary complexity to the law of corporate insolvency. Putting aside the difficulties surrounding the rules of attribution 40 in corporate law which may arise in respect of some acts of bankruptcy, as well as the apparent inapplicability of at least one act 41 to companies, the concept of an act of bankruptcy is, arguably, redundant in the scheme of the legislation. An application for a receiving or bankruptcy order may be made in respect of a ‘debtor’ which, according to the statutory definitions, includes an insolvent person who resides or carries on business in the relevant jurisdiction (geographical connection), and may include a bankrupt where the context requires such an interpretation. ‘Insolvent person’ is in turn defined as a person (excluding a bankrupt) with the relevant geographical connection who owes at least the statutory minimum and who is unable to, or has ceased paying his, her or its obligations as they generally become due (cash flow insolvent), 42 or who is effectively balance sheet insolvent.
These means of evidencing the condition or state of insolvency are converted into positive acts of bankruptcy which the debtor becomes capable of committing where the debtor:
exhibits to any meeting of his creditors any statement of his assets and liabilities that shows he is insolvent, or presents or causes to be presented to that meeting a written admission of his inability to pay his debts; gives notice to any of his creditors that he has suspended or is about to suspend payment of his debts; ceases to meet his liabilities generally as they become due.
These three acts of bankruptcy, which are a subset of the acts listed in the various insolvency statutes, are merely linguistically re-engineered versions of the definitional strands of the statutory meaning ascribed to ‘insolvent person’. They add nothing to the notion of what amounts to insolvency in the definition section and, as such, are superfluous. Unlike the substantive definitions of insolvent person, however, the statutory language denoting acts of bankruptcy is patently agentive. This is so because the debtor is, as far as possible, clearly and deliberately made to be the instigator or agent of the various acts indicated by the verbs in the main clauses (eg., exhibits, presents, gives notice) of the provisions describing most of these acts of bankruptcy.
While the semantic concept of agentivity may be definitionally problematic, there is agreement among linguistic scholars that it involves an assertion of the direct cause of the event 43 so that strongly agentive constructs clearly impute primary responsibility for the action of the verb phrase to an agent or instigator. 44 It is this semantic feature which characterises the various acts of bankruptcy by virtue of which the debtor is linguistically and legally made the cause of the event, and ultimately then, of the insolvency. This language differs to some extent from the nature of the language of the statutory definition of insolvent person which is much less agentive in character.
One strand of this definition describes an insolvent person as someone who ‘is unable to meet his obligations’. Semanticists have shown that be (is) able,
45
described in linguistics as a semi-modal,
46
expresses ability – ‘an agent's potential for taking a particular (type of) action’.
47
While this seems to suggest that it is the agent who may bring about or cause the action, semantic analysis offers more nuanced insights. Linguists have argued that because be (is) able is indicative of the relevant agent's capacity in respect of some act, it essentially ascribes a quality to the agent which is more consistent with a semantic property of non-activity, that is, stativity. Nadathur explains it in the following terms: …an ability assertion is a type of property attribution: crucially, it represents a stative predicate, albeit one which is inherently associated with action.
48
(emphasis in the original)
From this perspective, the use of be (is) able, tends to weaken agentivity, notwithstanding a formal syntactic structure typical of an active subject. As explained below, this is also the case for the negated form of the semi-modal. Weak agentivity of the semi-modal, be (is) able, is supported by another semantic analytical perspective which postulates that there two dimensions to the modality of ability in be (is) able – a potential internal to the agent in respect of which he has some control, as well as an external component which facilitates the actualisation of the agent's potential. 49 The external element, circumstances beyond the control of the agent, may prevent the agent from actualising his, her or its potential. Context may assist in determining the degree to which one or the other dimension of ability is at work in an utterance or statement. The external element of the semantics of the ability value of be (is) able indicates that this semi-modal is not as strongly agentive as, for example, the verbs introducing the various acts of bankruptcy under the statutes. Thus, while it may be tempting to ascribe agentivity to the subject of the statutory definition (insolvent person), the semantics of be able diminishes the potency of such an assertion. In addition to this, in some situations where able is negated, for example, by the prefix, un-, as occurs in a statutory definitional strand of ‘insolvent person’, it signifies the putative agent's complete lack of choice in realising the action indicated by the infinitival verb; that some factor beyond the agent's control is operating to restrain the agent's internal ability. This analysis from linguistics bolsters the argument that the syntactic agent in the statutory definition is semantically subordinated to a notional agent which bears more causal responsibility.
The second definitional strand of the term, insolvent person, in the reformed insolvency statutes refers to a debtor ‘who has ceased paying his current obligations in the ordinary course of business as they generally become due’. Constructions involving cease + V-ing (gerundive) or to V (infinitive) raise difficult questions in semantic analysis. Freed 50 and Wierzbicka 51 suggest that generally cease, when compared with its synonym, stop, implies less intentionality and choice on the part of the subject. This would tend to suggest that there is a diluted degree of agentivity on the part of the subject in the statutory definitional strand under discussion. However, more nuanced studies propose that where cease + V-ing occurs, particularly with an animate subject, it is more likely to signify that the subject is the intentional agent of the cessation of the event. 52 These studies also suggest that with an animate subject, cease + to V is more likely to signify that the subject is not the agent or cause of the cessation. On this analysis, it is arguable that the definitional strand under discussion which contains the language, cease paying, attributes responsibility for the cessation of payments to the debtor. It is notable, though, that this definitional strand converts into the less intentional linguistic construction, cease + to V, in the act of bankruptcy, ‘where the debtor…ceases to meet liabilities generally, as they become due’. 53
The third definitional strand of the term, insolvent person, in the statutes patently describes a state or condition of insolvency – classic balance sheet insolvency whereby the value of a person's aggregate assets is insufficient to discharge all his, her or its debt obligations. It may be said then that the language of the various definitional strands for the term, insolvent person, alternates between weakly agentive, even stative constructions and a construction which semantically appears to attribute responsibility for the insolvency to the debtor.
In contrast to the muted agentivity in some of the language of the substantive statutory meaning of insolvent person, is the language in which the majority of the various acts of bankruptcy have been framed. In fact, in one act of bankruptcy, the drafter's resolute agentivity appears to distort the ordinary semantic content of a particular lexeme. The various modern insolvency statutes of the Commonwealth Caribbean contain a provision stating that a debtor will have committed this act of bankruptcy where he ‘permits any execution or other process issued against the debtor…to remain unsatisfied for thirty days’. The lexeme, permits, ordinarily denotes that the actor has control over the circumstance; is in a position to intentionally enable or not the circumstance; or has the power to bring about or not the circumstance. Execution, a judgment creditor-initiated enforcement process sanctioned by the court, will not generally be a process over which any debtor contemplated by the provision has any effective control. It is submitted that a debtor who ‘permits’ execution to remain unsatisfied is unlikely to be exerting control, or deliberately failing to satisfy the execution. In actuality, the semantic role of the debtor in the act of bankruptcy under discussion is not one of actor. An unsatisfied execution will typically be attributable to the inability of the debtor to satisfy, by way of payment or the production of goods of the requisite value, the judgment being enforced. It is this tension between the semantics of the verb, permit, (suggesting a debtor's power to allow or not), and the dynamics of an execution process in which the debtor has no real ability to bring about the satisfaction of the judgment debt, which strains the ordinary denotation of the lexeme, permits.
In his 1938 article on acts of bankruptcy in the then existing US law, Israel Treiman refers to this semantic incongruity. Citing two acts of bankruptcy from the now repealed US Bankruptcy Act of 1898 with a comparable use of the cognate term, permitted, Treiman alerts the reader to the semantic discord: Observe how nonaction was tortured into action through the use of the phrase ‘suffered or permitted’ in the first clause of each act… Both acts are obviously acts committed by the creditor; in each the debtor is utterly passive. Yet each was camouflaged into an act by the debtor.
54
The distinct agentive quality of the language describing the various acts of bankruptcy in the Canadian-modelled insolvency statutes in some jurisdictions of the Commonwealth Caribbean is combined, in some instances, with express requirements for proof of fraud in establishing the act of bankruptcy. 58 This legal requirement imports (dishonest) intent and thereby consolidates the notions of agentivity and causality on the part of the debtor that the language describing the acts of bankruptcy conveys. Issues of proof of intent aside, it is questionable whether this semantic feature is desirable in modern statutes as a basis for initiating involuntary corporate bankruptcy whose focus should be the financial state of the debtor as the trigger for bankruptcy. The strong agentive language of the acts of bankruptcy is incongruous with this focus and artificially distorts the stative nature of insolvency. Apart from introducing a redundant legal layer or step in the route to bankruptcy for companies, it has the effect of shifting attention away from the financial status of the distressed company, redirecting focus to the company's actions and responsibility for the insolvency. It is submitted that this focus is misplaced at this stage of the insolvency process, particularly since the causes of any given case of corporate insolvency may be attributable to a range of converging factors, of which exogenous ones may be dominant. The overriding inquiry at this stage should be whether the bankruptcy procedure, as a collective creditor-protection mechanism in response to the common pool problem 59 that arises in insolvency, is required. This would best be determined by an examination of the company's financial state, applying the relevant tests for insolvency as expressed in the statutory definition of insolvent person.
It may be contended that creditors may encounter difficulty in acquiring direct proof of a debtor's financial state, and hence, the strongly agentive acts of bankruptcy constitute useful proxies which facilitate the requisite proof of the debtor's financial condition. An abandonment of the notion of acts of bankruptcy may thus necessitate an exploration of the means by which creditors may evidence the debtor's financial condition for the purpose of an application for a receiving order. Such an exploration is beyond the parameters of this article, but it is instructive that the most frequently invoked act of bankruptcy appears to be the debtor's cessation to meet its liabilities generally, as they become due. This is one of the few acts of bankruptcy which directly addresses the debtor's financial condition. It is submitted that creditors affected by a debtor's failure to meet its obligations to them should not have much difficulty in establishing this for the purpose of involuntary bankruptcy. It is also worth reiterating that, under the traditional legislative provisions for corporate liquidations, the basis for an insolvent winding up by the court was a company's inability to pay its debts. 60 One way this could be established was by the company's failure to pay its debts as they fall due 61 which seems to overlap notionally with ceasing to meet liabilities generally, as they fall due, an unusually semantically weakly agentive act of bankruptcy under the modern statutes.
Receiving order
In Commonwealth Caribbean jurisdictions whose modern insolvency laws are patterned on the Canadian law, involuntary corporate bankruptcy will typically be initiated by a creditor making an application for a receiving order. 62 This replaces the procedure under the old regime for corporate insolvency which had been part of companies legislation. The old regime required that a creditor apply by petition to the court for a winding up of the company, hence the term, winding up petition. The nomenclature, receiving order, in the modern statutes is another reversion to the language of traditional bankruptcy legislation. In the now repealed Trinidad and Tobago Bankruptcy Act of 1916, for example, a court had the jurisdiction to make a receiving order upon the presentation of a bankruptcy petition by a creditor, or the debtor. 63 Under this old legislative scheme for bankruptcy, a receiving order facilitated the protection of the debtor's assets 64 by effecting a stay of creditor enforcement actions and by constituting a statutory officer holder, the Official Receiver, as receiver of the debtor's assets. It did not, however, make the debtor bankrupt, but allowed for the debtor to put to creditors a proposal 65 for a composition or scheme of arrangement. Where such a proposal did not materialise for whatever reason, or if the creditors so decided, the court could order that the debtor be adjudged bankrupt. It was upon this order for adjudication that a trustee of the bankrupt estate could be appointed. A receiving order therefore was the first stage of a two-stage process for the adjudication of bankruptcy under some traditional bankruptcy statutes.
This is in contrast to the legal effect of a receiving order under several of the new insolvency statutes under discussion whereby bankruptcy arises upon the making of such an order. This is consistent with the meaning ascribed to the term, bankrupt, which in some statutes 66 is described, in part, as a person against whom a receiving order has been made. Various modern statutes on insolvency across the region provide for the appointment of a trustee of the debtor's assets upon the making of a receiving order. This new effect of a receiving order, though, is obscured by virtue of the meaning ascribed to the term, receiving order, in the statutes using this legal device. These modern statutes generally provide that a receiving order means an ‘order of the Court made under any law that authorises the appointment of a receiver or receiver-manager’. 67 This definition 68 is at odds with the result of the making a receiving order by the court as the statutes do not provide for the appointment of a receiver or a receiver manager upon the making of the order, but rather a trustee 69 in whom the debtor's assets vest and who leads the bankruptcy or liquidation process. The lexical similarity between the terms, receiving order, on the one hand, and receiver and receiver-manager, on the other hand, may be misleading given their respective legal meanings in the context of corporate insolvency law – a fact which seemed to have escaped the drafters of several of the modern statutes.
As explained, the making of a receiving order under modern statutes triggers bankruptcy, a legal process for the resolution of unsecured debts in insolvency. Receivers and receiver-managers have long been a feature of corporate law. Perhaps the most widespread use of these office holders is as out-of-court appointees pursuant to debentures with charges or security interests, though they may also be appointed by the court. 70 Where they are so appointed, the debtor company is said to be in receivership, the procedure by which a secured debenture holder enforces his, her or its security. It may come as a surprise for the uninitiated student of corporate insolvency that the making of a receiving order under the modern statutes neither puts a company into receivership, nor are receivers or receiver-managers appointed by virtue of such an order having been made.
However, it should be noted that an interim receiver may be appointed by the court where the outcome of an application for a receiving order is pending (see, n 64 above). The function of an interim receiver is more in keeping with the role of a receiver pendente lite, rather than with the function of an out-of-court receiver or receiver-manager appointed pursuant to a secured debenture. The out-of-court receiver's central function is to realise the assets subject to the charge or security interest for the benefit of the secured creditor. In this context, the out-of-court receiver acts in the interest of the secured creditor, making the receivership essentially the secured creditor's remedy, particularly in circumstances where the company is unable to pay the debt in accordance with the terms of the debenture. An interim receiver upon appointment by the court is intended to ensure value preservation of assets and prevent waste of the debtor's property until the outcome of the application for the receiving order. 71 The interim receiver is under the direction of the court, and does not act for creditors or for the debtor. This adds to the complexity of the modern vocabulary for corporate insolvency.
In the Jamaican case of Development Bank of Jamaica v Proactive Financial Services 72 the court stated that the expectation, presumably of Parliament, is that the Insolvency Act would be operated by the trustees, creditors and insolvent persons and that, consequently, the role of the court would be limited. 73 The ability of these categories of lay persons to efficiently operate the statute is likely to be impaired by the semantic untidiness surrounding the terminology under discussion which has compromised the clarity, coherence and comprehensibility of the legislation.
Conclusion
It has been shown that the old–new lexicon of corporate insolvency is semantically problematic and has introduced unnecessary complexity into the law. The importation of strongly agentive language in the notion of acts of bankruptcy has also added an undesirable dimension to the ethos of corporate insolvency law. Research indicates that the way in which language is used to frame information has an effect on people's allocation of culpability. The use of agentive language is associated with higher levels of blame allocation to the putative agent when compared with the use of non-agentive descriptions. 74 Language thus conditions and reinforces perceptions of degrees of culpability. The suggestion is that the linguistic framing of the various acts of bankruptcy conveys a causal relationship between the insolvency and the debtor as well as a blameworthiness that is keenly attributed to the debtor. This contributes to a perpetuation of the perception of fault, dishonesty and criminality traditionally associated with a bankrupt, 75 and indeed infects corporate insolvency law in the Commonwealth Caribbean with bankruptcy stigma.
A part of the discourse on the modernisation of the insolvency laws of the Commonwealth Caribbean involved the need for a cultural right-about turn in the societal attitude to financial failure and how it has been perceived. For example, a parliamentary committee report on Jamaica's insolvency Bill noted the fact that entities which made submissions to the Committee ‘lauded the effort being made in certain provisions of the Bill to remove the stigma associated with bankruptcy and insolvency, and expressed the hope that with a change in the mindset of the persons who will find it necessary to use the legislation, this goal will be achieved’. 76 Similarly, during parliamentary debates on Jamaica's Insolvency Bill, the then Minister for industry, investment and commerce stated that it was imperative for Jamaica to ‘change the culture in this country where a stigma is attached to business failure’. 77 It is arguable that this aspirational goal of the legislation 78 is compromised by the use of stark agentive language and the semantics of blame which has been infused in the menu of acts of bankruptcy. This raises the issue of the danger of the legal transplantation process, specifically the issue of linguistic misalignment with legislative aims. It appears that the transplantation process has been carried out in a manner that threatens an important aim of that very process – achieving a modern legal regime responsive to an increasingly credit-dependent commercial system without reflexively punishing financial distress and failure. While there may be convincing arguments in support overall of legal transfer from large developed countries to small developing jurisdictions 79 such as those in the Commonwealth Caribbean, there remains the need for careful inspection and adaptation of the transplant to ensure alignment with critical reform objectives, legal efficacy and clarity. Research has demonstrated that cultural incompatibility with legal transplants in the area of insolvency presents a danger for effective transplantation. 80 This discussion has shown that the linguistic form of the transplant plays an important role in the reform strategy and may also jeopardise the very outcomes expected as a result of the transplantation.
Finally, insights from the sub-discipline of the sociology of language may help to explain the tension signalled by the old–new quality of the lexicon which has been discussed. The sub-discipline is premised on the claim that linguistic form is conditioned by, and is reflective of social behaviour. 81 This extends to legislative language practices which may also be taken as mirroring and affecting the social context. The use of old lexicon infused with new meanings may demonstrate that social attitudes to bankruptcy are in transition. It is notable that Jamaican legislators, in abandoning the word ‘bankruptcy’ in the title of Jamaica's modern legislation, were motivated by a desire to reorient social attitudes and influence perceptions about business failures. 82 This may be interpreted as manipulating linguistic form not only to symbolise one of the aims of the legislation, but also to help reshape social attitudes towards bankruptcy. Arguably, the old–new lexicon reflects the tension between traditional and still extant negative social perceptions of bankruptcy on the one hand, and the insolvency reform goal of bankruptcy destigmatisation on the other hand.
