Is insurance a solution to address environmental considerations in insolvency? a conceptual exploration

Abstract

The prioritisation of some types of creditors within insolvency makes it challenging to balance environmental considerations during insolvency. In India, under the Insolvency and Bankruptcy Code 2016 (IBC), environmental claims and liabilities would generally manifest as unsecured claims. Unsecured claims have lower priority than secured claimants under the IBC. Environmental liability may also be extinguished in an insolvency resolution process, as unsecured creditors need not always be compensated during resolution. The prioritisation of environmental claims within insolvency is also largely unclear within EU countries. Consequently, scholars tend to focus on balancing prioritisations when they study the interaction between environmental considerations and insolvency. Using the Public Liability Insurance Act in India, we explore how insurance may be expanded to harmonise insolvency policy with environmental considerations.