Ethics and conflicts,the role of insolvency professionals in the integrity of the Canadian bankruptcy and insolvency system

Insolvency practice involves a balance between adherence to rules of ethical conduct and the avoidance of conflicts of interest, and the need to find cost effective methods of debt collection or restructuring under the statutory regime. Potential conflicts of interest are inherent in the multiple roles granted to such professionals under the insolvency system, whether the financial distress is personal or commercial. This article begins to explore whether or not these conflicts serve as barriers to the effective administration of the insolvency and bankruptcy system. It also examines whether oversight of professional ethics and avoidance of conflicts is a matter for legislative intervention or best left to the profession, including temporal and materiality issues in disclosure of potential conflicts, and accountability to stateholders through the appointment process. The key issue is how one manages those conflicts while maintaining the integrity of the system. Copyright © 2004 John Wiley & Sons, Ltd.