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GLOSSARY

Administration/Administration Order

This is a process by which the directors of a company, its creditors or the holder of a qualifying floating charge place the company into administration by filing the requisite appropriate notices at court. Administration protects the company from its creditors whilst the Administrator prepares a proposal for the creditors.

Administrator

The licensed insolvency practitioner appointed to deal with the Administration of the company by either the directors, creditors or holders of a qualifying floating charge.

Administrative Receiver

A licensed insolvency practitioner who has been appointed by the holder of a debenture to realise the company's assets on behalf of the debenture holder.

Administrative Receivership/Receivership

The process under which an insolvency practitioner is appointed receiver by a debenture holder to realise the company's assets on its behalf. This process has become less common since September 2003 when the Enterprise Act 2002 came into force.

CCJ/County Court Judgment

A decision in favour of a creditor in respect of the debt they are owed.

Charge

A security interest taken over the property of a company by one of its creditors to protect itself against non payment. Typical examples are a mortgage or debenture

Compulsory Liquidation

This occurs where a petition is made to the court to wind up the company. Such petitions are normally presented by creditors.

Creditor

A person who is owed money by the company

Creditors Voluntary Liquidation

A process by which the directors of a company convene a meeting of shareholders and then creditors to place the company into insolvent liquidation. This is done with the assistance of a licensed insolvency practitioner appointed by the directors.

Creditors Meeting

A meeting held at which creditors can put forward their views and vote on resolutions put before them.

CVA/Company Voluntary Arrangement

An agreement put forward by the company to its creditors through a licensed insolvency practitioner usually to agree a full and final settlement with the company's creditors. This is normally done either by making a monthly contribution over a period of time [3 to 5 years] or a one off payment to creditors in settlement of their claims.

D Report

All liquidators, administrators and administrative receivers are required to submit a report to the Department of Trade and Industry on the conduct of all directors and shadow directors of a company over which they are appointed. The Department of Trade and Industry will, in appropriate circumstances, carry out an investigation into the affairs of the directors and may chose to commence disqualification proceedings against those directors who they believe are unfit to act as company directors

Debenture/Mortgage Debenture

A type of security, usually held by banks which includes a floating charge over the company's assets. Depending on when it was dated it gives a right to appoint administrative receivers or an administrator over the company.

Dividend

A sum distributed to the creditors of the company.

Fixed Charge

A charge held over specific assets. The company will not be able to dispose of such assets without specific consent of the chargeholder. An example of this would be a charge over land and buildings, whereby they cannot be sold without the chargeholder's consent.

Floating Charge

This is a type of charge held over all of the assets of a company not subject to a valid fixed charge.

InsolvencyPractitioner/Licensed Insolvency Practitioner

Under the Insolvency Act 1986 only persons who are licensed insolvency practitioners can act as liquidators, supervisors of voluntary arrangements, administrators, administrative receivers and trustees in bankruptcy. It is a criminal offence for anyone who is not a licensed insolvency practitioner to act as one. Furthermore, any purported appointment by someone who is not licensed could be void.

Liquidator

The Official Receiver or licensed insolvency practitioner appointed to act as liquidator of a company or partnership.

Nominee

A licensed insolvency practitioner who assists in preparation of the proposal and convening of the meeting of creditors in a company voluntary arrangement or partner voluntary arrangement prior to its being approved by creditors.

Official Receiver

A civil servant working for the Department of Trade and Industry who deals with the affairs of a company in liquidation.

Partnership Voluntary Arrangement/PVA

A voluntary arrangement for a partnership over the partnership assets. A licensed insolvency practitioner has to be appointed as the nominee/supervisor.

Proof of Debt

A form to be completed by creditors in liquidation, administration or voluntary arrangement setting out the basis on which they are owed monies.

Proxy Form

If a creditor cannot attend the meeting of creditors themselves and wish to appoint someone to represent them they must fill in this form and return it to the convener of the meeting.

Retention of Title/ROT

Suppliers of goods, often have standard terms and conditions whereby they retain ownership/title of the goods they have supplied, until they have been paid for them.

Secured Creditor

A creditor who holds security over the assets of the company, normally in the form of a charge or debenture. Secured creditors do not normally vote at meetings of creditors, choosing instead to rely on their security.

Shadow Director

A person, although not registered as a director at Companies House, on whose instructions the directors of a company are accustomed to acting.

Statement of Affairs

This is a document which has to be verified by Affidavit completed by the company's director[s] which gives details of all of the company's assets and liabilities and creditors.

Supervisor [of CVA/PVA]

A licensed insolvency practitioner who has been appointed to supervise the voluntary arrangement agreed between the company/partnership and its creditors.

Winding-Up Order

An order of the court for the compulsory winding up of a company or partnership. See compulsory winding up above.

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