The Doctrine Of Commercial Wisdom: Judicial Deference Or Abdication Under Insolvency And Bankruptcy
- YourLawArticle
- Oct 16
- 1 min read
Written by: Jennifer Francis , B.A.LL.B (4th Year), Lovely Professional University
Abstract
This essay examines the legal theory known as "commercial wisdom," which posits that during bankruptcy proceedings, courts should generally defer to business decision-makers, particularly Committees of Creditors, creditors themselves, or insolvency specialists. In addition to outlining the doctrine's conceptual parameters and tracing its beginnings, it also examines the conflict between judicial scrutiny and deference and assesses whether judicial deference in practice equates to reasonable restraint or an abdication of judicial duty. The paper argues that measured deference is required to protect creditor primacy and commercial expertise, but that courts must retain robust review powers where statutory compliance, manifest bad faith, or procedural irregularities are alleged. It does this by using doctrinal analysis and comparative examples, mainly from India, with reference to international practice. In order to strike a compromise between legal accountability and commercial autonomy, the conclusion suggests more precise legislative standards and a calibrated level of evaluation.
Keyword: Commercial wisdom, Committee of Creditors, Insolvency, Judicial review, Cross-border insolvency
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