Glossary

A process which can be commenced by the directors, floating charge holders or companies by filing a “Notice of Appointment” at court, to appoint an administrator, without a court application and hearing. For more information on this type of insolvency procedure click here to download our PDF.

The licensed insolvency practitioner in office during administration.

A licensed insolvency practitioner who is appointed by a secured lender under the terms of the lender’s charge, to recover monies owed to the lender.

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The insurance cover needed by a licensed insolvency practitioner when appointed to deal with the insolvency of a company. The cost of the bond is payable from the estate. The bond may also be described as a specific penalty bond.

An order directing that a charge be registered at the Land Registry on property owned by the company. This is also a form of enforcing civil debt. An order preventing the sale or disposal of a property until the charge has been cleared.

This type of liquidation applies where a creditor has petitioned the court for the winding -up of the company. The Official Receiver becomes liquidator but may, in time, be replaced by a licensed insolvency practitioner.

An act which sets out the circumstances in which a person may be disqualified from acting as a director of a company and the duration of the disqualification.

A legally binding agreement between a company and its creditors’ to repay some or all of its debt over a period of time. Click here to download our PDF.

Any person or company or business to whom the company owes money.

A meeting of creditors’ called to appoint a licensed insolvency practitioner as either, liquidator of a limited company or trustee in bankruptcy over an individual.

In Administrative Receivership, the creditors’ will be presented with a report prepared by the administrative receivers, which will give an overview of their involvement since their appointment. The report will contain details of the company’s current financial situation and an estimate of likely dividend available for creditors’, wherever possible.

A CVL is liquidation where the directors/shareholders of the company decide that the company can no longer continue to trade due to its insolvent position and take steps to consult with a licensed insolvency practitioner to convene a meeting of the company’s creditors’. The creditors’ decide who will be appointed as liquidator on the day of the creditors’ meeting.

Any person who owes money to another.

A directors’ sworn statement of affairs required in a member’s voluntary liquidation to demonstrate that the company is solvent.

A document granting security over a company’s assets in exchange for borrowing. The term is used to describe a document which would contain a fixed charge as well as a floating charge.

A director of a limited company can be disqualified if, during his term of office, a liquidator establishes sufficient evidence of “unfit” conduct. The Department of Trade and Industry (DTI) make the decision based on the information provided by the liquidator.

A company is dissolved when it is removed from the register at Companies House.

A distribution to creditors’ or shareholders by a licensed insolvency practitioner.

Security granted by a company charging a particular asset (e.g. land and buildings) in exchange for borrowing. The borrower’s power to deal with the asset concerned is restricted.

Security granted to a lender by a company, charging general assets in exchange for borrowing.

Running a company with intent to defraud creditors’.

The framework of current insolvency law in the United Kingdom and by which all Insolvency Practitioners are governed.

See Insolvency Practitioner

A person licensed by his/her recognised professional body to act in accordance with Insolvency law in acting as office holder in formal insolvency procedures.

A person who holds an insolvency license issued by one of the recognised professional bodies and who is thus regulated by that particular body. Any complaints regarding a license holder should be notified to the license holder’s regulating body. If you wish to make a complaint you should ask for the details of the particular regulating body. See under FAQ’s company insolvency for short list of bodies and their web-site address.

A right of an individual or company to keep possession of assets or documents belonging to another individual or company until settlement of an outstanding debt.

A process which involves the winding up of a company’s life, the disposal of its assets and the distribution of the proceeds to the company’s creditors’. Click here to download our pdf.

A number of persons (between 3-5) appointed to assist the office holder during the course of an insolvent liquidation.

An Insolvency Practitioner who is the office holder in any type of liquidation. Note The Official Receiver may only be liquidator in a compulsory liquidation.

The company is solvent but the directors/shareholders actually make this declaration and proceed to liquidate the company to pay every class of creditor in full and return any surplus to shareholders. Click here to download our pdf.

Breach of duty by a company’s directors in respect of their dealings with company funds or property.

A period of time before a CVA is considered at a creditors’ meeting. It is put in place to protect a company’s assets.

A method of questioning a person under oath before an officer of the Court to obtain information.

A civil servant employed by the Department of Trade and Industry who is responsible for many aspects of bankruptcy and compulsory liquidation.

A method used by creditors’, individuals or directors to commence proceedings to wind up a company (Compulsory Liquidation).

Any type of transaction carried out by a company’s directors intended to favour one creditor over another.

A creditor with special rights who is paid ahead of unsecured creditors’. The best example of this would be employees, who rank ahead of unsecured creditors’ for arrears of pay, accrued holiday pay and pension contributions in certain circumstances.

A part of the floating charge assets which are set aside for unsecured creditors’. (See Enterprise Act 2002 for further details).

A form which gives details of what is owed to a creditor or individual and should be completed and signed for submission with a proxy form. Click here to download a sample proof of debt form.

A form giving a creditor the right to vote at a creditor’s meeting. Click here to download a sample of proxy form and follow the instructions for completion.

A clause used in a contract by a seller on a buyer laying claim to the goods until such time as they are paid for.

A creditor who holds security over the company’s assets, e.g. a bank, or other financial institution. This class of creditor is paid before ordinary creditors’.

A person who, in all but name, is running the day to day business of a company and upon whose instructions, the directors of a company are used to acting.

A sworn document detailing a company’s assets and liabilities.

A document issued by someone who is owed monies. The company receiving it has 21 days in which to respond. You should take it seriously and contact the company to discuss your situation with them. Likewise if your company is issuing a statutory demand against another company, make sure that the debt is due and owing to your company at the time of issue. If you are the creditor and have not received any communication within the 21 day period, your company may proceed to petition for the compulsory winding up of a company. If you are the debtor and intend to defend the statutory demand, you must lodge a defence in Court within 18 days of receiving the demand.

A selling off of company assets or any other transaction which occurs at a significant reduction in value.

Any creditor who does not hold security (bank or other financial institution or private investor) This class of creditor will rank last of all in cases where a dividend is likely to be paid out of liquidation.

A signed agreement by a debtor not to remove goods levied by a bailiff under the authority of a warrant of execution and to allow the bailiff access at any time to inspect the goods, in consideration of which the bailiff leaves the goods in the possession of the debtor.

A process involving the issue of a petition through the court to wind-up a company. The company is then placed into compulsory liquidation.

Writ issued by the court directing a sheriff to levy execution upon a debtor’s goods.

A civil action brought against directors of companies who have failed to take the necessary steps to minimise losses to creditors’ when they knew or ought to have known the insolvent state of a company.