Insolvency law is important because it gives a framework for insolvency practitioners and the business community and public at large to understand how insolvencies have to be dealt with. They provide certainty as to what will happen, what needs to be paid first, who needs to be paid back and in what order. It also creates protection for businesses through such mechanisms as the Administration and Company Voluntary Arrangement for those companies to be salvaged and returned to viability and to continue to contribute to the local economy to provide jobs.
Whilst in the EU there is a mutuality of recognition such that if a UK company or group of companies become insolvent that has subsidiaries in Europe then the European subsidiaries will be subject to the same law as the UK. There’s an attempt to make this an international recognition through what is called Insol which is the global umbrella body for insolvency practitioners and there are agreed commonalities but different counties do have different rules, in particular the US has quite a different framework to the UK and is far more court and legal based and far more expensive than UK insolvency law. The UK insolvency regime is recognised as being one of the most efficient and also the most effective at saving businesses and jobs in the world.