Origin of Bankruptcy Procedure in Roman Law

Abstract

In order to clarify the objectives of bankruptcy, to reveal the true essence of bankruptcy procedure and the origin of legal terms, it is necessary to ascertain the nature of this institute of law, as well as the reasons for its creation and development. This article provides historic analysis of the development of the institute of bankruptcy procedure. For this purpose, a historic comparative research is undertaken in the article, in order to find certain parallels of bankruptcy procedure under Roman law and the modern bankruptcy procedure. Roman law has been chosen as the most phenomenal ancient law for the purposes of undertaking a historic analysis of the development of bankruptcy procedure. In the authors’ opinion, it it the best example that reveals the origin of bankruptcy procedure, and the reasons for its formation. Analysis of certain private law institutes of Roman law enables the authors to conclude that the main features (principles) of the bankruptcy procedure formed precisely under Roman law: replacement of personal liability by pecuniary; public auction as a form of realization of debtor’s property; transition from selling of debtor’s property as a whole to disposal of property in divided property units; creation of subject, who administers auctions of debtor’s property under oath not to act in selfish purposes; setting of a term of 30 days, during which a debtor has to cover the debts (claims’ dispute resolution); establishment of the institute of informing creditors about initiated procedures of debt retrieval and encouragement to join these procedures; establishment of the ban to recover debts from household items; laying of the foundations of the institute of peace agreement between the debtor and his creditors; establishment of actio Pauliana - a remedy for the protection of creditors rights. The mentioned rules in one way or another eventually have been transferred to legal acts on legal relations in case of bankruptcy of many foreign countries.