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. An Administration Order protects a company and its assets from creditors. Dependent on the circumstances, there may or not have to be a hearing at Court before an administrator is appointed.
The Licensed Insolvency Practitioner appointed to deal with the Administration of a Company by either the Directors, Creditors or holders of a qualifying floating charge.
A Licensed Insolvency Practitioner who has been appointed by the holder of a debenture to realise a Company’s assets on behalf of the debenture holder.
The process under which an Insolvency Practitioner is appointed receiver by a debenture holder to realise a Company’s assets on its behalf. This process has become less common since September 2003 when the Enterprise Act 2002 came into force.
A formal application to the Court, the effect of which is to cancel a Bankruptcy Order.
A security interest taken over the property of a Company, or an individual, by one of its creditors to protect itself against non payment. Typical examples are a mortgage or debenture.
The Court makes an order to have a company wound up. The petition to Court to have a company wound up is often presented by a creditor who is owed money.
County Court Judgment (CCJ)
A decision by the Court in favour of a creditor in respect of a debt they are owed by a company or an individual.
Creditors Voluntary Liquidation
A process by which the directors of a company convene meetings of shareholders and creditors to place the company into insolvent liquidation. This is done with the assistance of a Licensed Insolvency Practitioner appointed by the Directors.
A meeting at which creditors can put forward their views and vote on Resolutions put before them.
Company Voluntary Arrangement (CVA)
A proposal put forward by a company to its creditors through a Licensed Insolvency Practitioner to agree a full and final settlement of the company’s creditors. This is normally done either by making a monthly contribution over a period of time [1 to 5 years] or a one off payment to creditors in settlement of their claims.
All Liquidators, Administrators and Administrative Receivers are required to submit a report to the Insolvency Service (part of the Department for Business Innovation & Skills) on the conduct of all Directors and Shadow Directors of a company over which they are appointed. The Insolvency Service may, in appropriate circumstances, carry out an investigation into the actions of the Directors and may choose to commence disqualification proceedings against those Directors who they believe are unfit to act as Company Directors.
A type of security, usually held by banks or other financial institutions, which includes a fixed and/or floating charge over a company’s assets. Depending on when it was dated, it gives a right to the holder to appoint Administrative Receivers or an Administrator over the company. Debentures can only be given over the assets of a limited company.
Dividend to Creditors
A sum distributed to the creditors of a company by the liquidator from the assets that he has realised.
Taking out one large loan to pay off a number of smaller debts.
Debt management plan
A repayment scheme put in place to pay off your unsecured debts. Debt management plans have no statutory backing and are therefore not enforceable either by the debtor or the creditor.
Equity in a Property
The amount remaining after you deduct from the value of the asset (often property) the sums charged on that asset. Negative equity is where, after this deduction, there is still an amount owed to the secured creditor.
A charge held over specific assets. A company or individual will not be able to dispose of assets subject to such a charge without specific consent of the Charge Holder. An example of this would be a mortgage over land and buildings, whereby they cannot be sold without the mortgage company’s consent.
This is a type of charge held over all of the assets of a company not subject to a valid fixed charge. These assets, such as stock and debtors, tend to change regularly and, therefore, are not capable of being subject to a fixed charge.
Insolvency Practitioner/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. Any purported appointment of someone who is not licensed will be void. Furthermore, it is a criminal offence for anyone who is not a Licensed Insolvency Practitioner to act as one.
Individual Voluntary Arrangement (IVA)
A formal agreement between an individual and his unsecured creditors in full and final settlement of all unsecured debts. The arrangement has to be supervised by a licensed insolvency practitioner and, unlike a debt management plan, is enforceable in law. The arrangement normally involves the payment of a monthly contribution over a period of time [1 to 5 years] or a one off payment to creditors in settlement of their claims.
The Official Receiver or Licensed Insolvency Practitioner appointed to act as liquidator of a company or partnership.
A Licensed Insolvency Practitioner who assists in preparation of a Proposal and convening of the meeting of creditors in a Individual/Company/Partnership Voluntary Arrangement prior to its being approval by creditors.
A civil servant working for the Insolvency Service (part of the Department for Business Innovation & Skills) who deals with the affairs of a company in compulsory liquidation or a bankrupt.
Partnership Voluntary Arrangement (PVA)
An arrangement with the unsecured creditors of a partnership as to how they will be settled either in whole or in part. A Licensed Insolvency Practitioner has to be appointed as the Nominee/Supervisor. It may be necessary for the individual partners to propose their own individual voluntary arrangements to deal with their personal liability for the partnership creditors.
Proof of Debt
A form to be completed by creditors in a liquidation, administration or voluntary arrangement setting out the basis on which they are owed monies.
If a creditor cannot attend a 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. Limited companies have to appoint a proxy holder to represent them at any meeting of creditors.
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.
A creditor who holds security over the assets of the company, often in the form of a charge or debenture. Secured creditors cannot vote at meetings of unsecured creditors unless they value their security and vote on the unsecured element of their debt.
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 a Statement of Truth, which sets out details of all the assets and liabilities of an individual, company, or partnership. The assets should include details of their actual realisable values. The liabilities should include contingent creditors as well as those creditors whose claims are known.
Supervisor (IVA/ CVA/PVA)
A Licensed Insolvency Practitioner who has been appointed to supervise the voluntary arrangement agreed between an individual/company/partnership and the unsecured creditors.
Trustee in Bankruptcy
The Licensed Insolvency Practitioner appointed by either the Official Receiver or the creditors to deal with the affairs of the Bankrupt.
An individual against whom a bankruptcy order has been made who has not yet received their discharge.
An order of the Court for the compulsory winding up of a company or partnership.