Is a procedure which places a company under the control of an
insolvency practitioner and the protection of the court.
Administration is intended to fulfil one of the following
objectives; rescuing the company as a going concern, or achieving a
better result for the creditors as a whole than would be likely if
the company were wound up without first being in administration.
While a company is in administration creditors are prevented from
taking any legal recovery action against it, except with the
permission of the court. An administrator may be appointed either
by an order of the court, on application by either, the company,
its directors, one or more creditors, or, if it is in liquidation,
its liquidator. Without a court order an administrator may be
appointed, by direct appointment by the company, its directors or a
creditor who holds comprehensive security of a type which qualifies
him to make such an appointment.
An organisation that will advance funds to a company on the
strength of the assets of its balance sheet, principally, debtors,
stock, plant and machinery and property. The organisation will
normally take a debenture to secure their lending position.
The administration of the affairs of an insolvent individual, known
as the debtor, by an Insolvency Practitioner ("IP"),
known as the trustee in bankruptcy. The assets of the
bankrupt's estate are realised for the benefit of the
A procedure which enables an insolvent company to propose a repayment plan to its creditors. Under this plan, creditors agree to accept a lesser sum of money in full and final settlement of debts due to them by the company. An IP supervises this procedure.
Also referred to as ‘compulsory winding up'. A liquidation procedure which is initiated by either a creditor, the company or a shareholder making a petition to the court, normally for unpaid debts which results in the court making a winding up order.
The most common liquidation procedure whereby shareholders, usually at the directors' request, pass a resolution to place a company into liquidation because it is insolvent. The process is driven by the directors, unlike the compulsory liquidation, which is normally driven by a creditor. An independent IP is appointed to act as liquidator by the directors and shareholders and creditors are invited to a meeting to either agree the appointment or nominate an alternate liquidator.
A contract entered into between an individual (know as the debtor) and his creditors whereby the debtor makes a proposal to pay a lesser sum to the creditors in full and final settlement of debts. The creditors formally approve or reject the proposal at a formal meeting. The arrangement normally lasts for between 3 and 5 years. The arrangement provides the debtor with protection from his creditors and binds all creditors given notice of the arrangement. The arrangement is approved if greater than 75% of creditors who participate in the meeting, vote in favour.
A similar organisation to a factor. However, because the borrower will typically have a stronger balance sheet, the invoice discounter will usually offer the company a confidential finance facility. In these circumstances, the company's customers are unaware of the discounters' involvement, even though there has been an assignment of the invoices to the invoice discounter.
An advisor, regulated by a recognised professional body, who is authorised to act as an administrator, administrative receiver, liquidator or supervisor, of a company, or trustee in bankruptcy or supervisor of an individuals affairs.
Often referred to as ‘winding up' and it is the most common corporate insolvency procedure. A liquidator is appointed to realise the company's assets and distribute the proceeds in a prescribed order of priority. A liquidation signals the cessation of a company and its eventual removal from the companies register. It can occur following an administrative receivership or administration.
This a is solvent liquidation, in which a liquidator is appointed by the shareholders. The company's assets are sufficient to settle all liabilities within twelve months and the surplus funds are distributed to the shareholders (members).
A process introduced by the Enterprise Act 2002 that allows smaller companies to obtain protection from creditor actions in order to restructure their balance sheets via a CVA, without the necessity for an Administration Order.
An officer of the Insolvency Service responsible for handling bankruptcies and compulsory liquidations in the initial stages immediately after a winding up. This person is head of the regional offices which have responsibility for bankruptcies and compulsory liquidations.
A creditor who does not hold security (e.g. a mortgage) over a debt and one which is not given preferential status under the Insolvency Act 1986. In general most creditors other than employees are unsecured.