Abstract:
It is argued in this article that creditors who act collectively to deal with the insolvency of their common debtor, whether in formal insolvency proceedings or in a private debt restructuring exercise, owe each other a duty to refrain from receiving any additional and undisclosed benefit, from the debtor or from a third party, in consideration for taking a particular position in relation to the debtor’s insolvency. The duty is based on a line of old English authorities which, from the beginning of the last century, appeared to have lapsed into obscurity. Although more recent cases have confirmed that the duty continues to apply in contemporary insolvency regimes, new issues are likely to be encountered which may require some reformulation and refinement of the duty.