How AI Is Reshaping Insolvency Regulation

The International Association of Insolvency Regulators (IAIR) is an international body that brings together the collective experiences and expertise of government insolvency regulators from jurisdictions around the world. Current membership comprises 41 government departments, agencies and public authorities. IAIR held its 2026 Annual Conference and General Meeting in Montréal from September 29 to October 1, bringing together insolvency regulators, policymakers and subject-matter experts from more than 36 organizations. The event was organized by Canada's Office of the Superintendent of Bankruptcy (OSB), with OSB Superintendent Elisabeth Lang serving as Chair of IAIR for the past year after serving on IAIR’s Executive Committee since 2019.

Discussions focused on a range of emerging issues affecting insolvency systems around the world, including artificial intelligence, risk-based regulation, enforcement, technology modernization, cross-border insolvency, small and medium-sized enterprise (SME) restructuring and regulatory performance measurement. Consistent with the Chatham House Rule under which the event was conducted, the observations below summarize key themes and discussions without attributing comments to individual participants or jurisdictions.

Superintendent Lang tells us that the dominant takeaway from this year's IAIR conference is that insolvency regulators are increasingly becoming data-driven organizations. Across jurisdictions, the conversation has shifted from digitization to intelligence, with regulators exploring how AI, advanced analytics, and risk-based supervision can improve outcomes while preserving accountability, trust, and professional judgment.

Q: What were the most significant themes to emerge from this year's IAIR conference?

A: Three themes stood out. First, many regulators around the world are adopting risk-based supervision models supported by data analytics and artificial intelligence. Second, many jurisdictions are grappling with how to modernize insolvency systems in the face of limited resources, aging technology, and increasing caseload complexity. Third, there was significant discussion about cross-border insolvency, harmonization initiatives, and the need for more effective information-sharing as insolvencies become increasingly international in nature.

Q: AI appeared frequently on the agenda. How do insolvency regulators view its role?

A: The discussion has moved beyond whether regulators should use AI to how they can do so responsibly and effectively. Many regulators are using or piloting AI to identify risk, prioritize oversight activities, analyze large datasets, support investigations, and automate administrative work. At the same time, there was broad consensus that AI should support, rather than replace, professional judgment and that governance, transparency, explainability, and human oversight remain essential.

Q: What lessons were shared about implementing AI in a regulatory context?

A: One of the strongest messages was that successful AI initiatives begin with data rather than technology. Organizations repeatedly emphasized that data quality, governance, and consistency are prerequisites for meaningful AI applications. There was also considerable discussion about change management. Several organizations noted that user adoption and trust can be more challenging than the technical development itself.

Q: Did any particular regulatory trend emerge from the international updates?

A: A notable trend is the shift toward earlier intervention and more proactive supervision. Rather than relying primarily on complaints or traditional audits, regulators are increasingly using data and risk indicators to identify potential issues before they become significant problems. There is also growing interest in continuous monitoring approaches and more targeted deployment of limited regulatory resources.

Q: Were there discussions about enforcement?

A: Yes. Several regulators described efforts to strengthen enforcement tools while ensuring proportionality. There was particular interest in civil enforcement mechanisms that can address misconduct that may not warrant criminal prosecution but nevertheless undermines confidence in the insolvency system. The broader conversation focused on how regulators can be more preventive rather than reactive.

Q: What are regulators most concerned about when it comes to AI?

A: Concerns generally fell into four categories: data quality, bias, accountability, and cybersecurity. There was significant discussion about ensuring that AI-generated outputs can be explained, audited, and defended if challenged. Many participants emphasized that regulators may eventually need to supervise not only insolvency professionals but also the algorithms and systems increasingly being used across insolvency processes. These concerns are reflected in the OSB’s guidance, which emphasizes that Licensed Insolvency Trustees remain responsible for the accuracy, confidentiality, and integrity of their work when using AI tools. Learn more in the Guidance on Use of Artificial Intelligence Tools.

Q: What role does technology modernization play in regulatory reform?

A: Technology modernization was one of the most common challenges discussed. Many authorities are operating legacy systems while simultaneously trying to implement new policy priorities, improve service delivery, and leverage advanced analytics. A recurring message was that modernization is no longer simply an operational issue; it is becoming foundational to effective regulation.

Q: Were there any insights relevant to restructuring and corporate insolvency practitioners?

A: Yes. Discussions highlighted growing interest in simplified restructuring processes, SME-focused insolvency frameworks, debtor-in-possession models, pre-pack procedures, and efforts to reduce costs and shorten timelines. Across many jurisdictions, policymakers are exploring ways to preserve viable businesses while improving returns to creditors and reducing procedural complexity.

Q: How much attention was devoted to cross-border insolvency issues?

A: Cross-border asset recovery, recognition of foreign proceedings, beneficial ownership information, and access to asset-tracing tools were recurring topics. Participants also discussed ongoing efforts to harmonize aspects of insolvency law and improve cooperation among jurisdictions while recognizing that local legal traditions and economic realities continue to create important differences.

Q: What was the discussion around insolvency system performance and measurement?

A: Many regulators are moving away from activity-based measures and toward outcomes-based performance frameworks. The focus is increasingly on questions such as whether interventions improve compliance, whether regulatory resources are being directed to higher-risk matters, and whether insolvency systems are delivering meaningful benefits for debtors, creditors, and the broader economy.

Q: Were there any broader economic concerns discussed?

A: Participants discussed rising insolvency levels in many jurisdictions, driven by factors such as elevated debt levels, financing costs, and economic uncertainty. There was particular interest in how insolvency systems can support economic resilience, facilitate business rescue where appropriate, and address the challenges posed by emerging creditor structures and distressed debt markets.

Q: Did you identify any areas that warrant further exploration?

A: One area that I believe merits further examination is how different jurisdictions address director accountability when companies continue operating while insolvent, including director disqualification regimes and related enforcement tools. I've asked my team to undertake some preliminary research to better understand the approaches being used internationally and the outcomes they are intended to achieve. Whether any future policy changes would be appropriate in Canada, and who would be best positioned to administer them, are ultimately matters for policymakers and Parliament. At this stage, our focus is simply on understanding the issue, the available models, and any lessons that may be relevant in a Canadian context.

Q: How does Canada's insolvency system compare internationally?

A: One of the benefits of participating in forums such as IAIR is the opportunity to benchmark our system against those of other jurisdictions. Canada has a mature and well-respected insolvency framework, and it was encouraging to see considerable international interest in a number of the OSB's recent initiatives, particularly in areas such as risk-based regulation, performance measurement, data analytics and the use of AI to support regulatory oversight. As an example, a representative from the World Bank noted that the OSB’s website is often cited as a model and a source of excellent information for jurisdictions that are establishing or modernizing insolvency systems.  At the same time, these discussions are a valuable reminder that no jurisdiction has all the answers. Many countries are experimenting with innovative approaches to issues such as debtor engagement, cross-border cooperation, SME restructuring and digital service delivery. The real value comes from learning from one another, which continues throughout the year via bilateral discussions, and continuously looking for ways to strengthen the effectiveness, efficiency and integrity of our respective insolvency systems.