Protecting the consumer holding active entitlements when a company ceases to trade: a legal analysis

Protecting the consumer holding active entitlements when a company ceases to trade: a legal analysis

Since the industrial revolution consumers have been caused detriment and left with very little option when a company they are dealing with becomes insolvent. Consumers may have placed a deposit on goods not yet received, purchased gift cards not yet used, or have a product warranty not yet expired. These consumers can apply to become an unsecured creditor of the insolvent company with low prospect of a return. There are, however, a small number of consumer groups such as investors in the Stock Market, Home Builders and Employees of insolvent companies who have been supported by government action. Governments in other jurisdictions such as the USA and the European Union have also enacted this support action. This thesis explores the regulatory developments behind those government actions in Australia, USA and the EU using doctrinal analysis and draws a comparative analysis. Using the Bank Deposit Insurance scheme model, used in most countries of the world, as a basis, the thesis then develops legislative guidelines for a compensation scheme to support all consumers who may have been caused detriment when a company ceases to trade.

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