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Administration Order

an administration order is a court order placing a company that is, or is likely to become, insolvent under the control of an administrator following a petition by the company, its directors or a creditor. The purpose of the order is to preserve the company's business and assets to allow a reorganisation or ensure the most advantageous realisation of its assets whilst protecting it from action by its creditors

Administrative Receiver

the person appointed by the holder of a floating charge debenture over a company's assets to collect in and realise the assets of that company and to repay the indebtedness to the debenture holder

Administrative Receivership

the term applied when an insolvency practitioner is appointed as an administrative receiver


a person who cannot pay the debts owed to his creditors as they fall due or with an excess of liabilities over assets and who has not been discharged from bankruptcy

Bankruptcy Order

the court order making an individual bankrupt

Company Voluntary Arrangement (CVA)

a voluntary agreement for a company is a procedure whereby a plan of reorganisation or composition in satisfaction of debts, is put forward to creditors and shareholders.

Compulsory Liquidation

the placing of a company into liquidation as a result of an application to the court, usually by a creditor

Connected Persons

directors or shadow directors and their associates, and associates of the company

Creditors' Committee

a creditors' committee is formed to represent the interests of all creditors in supervising the activities of an administrator or trustee in bankruptcy, or receiving reports from an administrative receiver

Creditors' Voluntary Liquidation (CVL)

relates to an insolvent company. It is commenced by resolution of the shareholders, but is under the effective control of creditors


a document stating the terms of a loan, usually to a company. Debentures may be secured on part or all of a company's assets, or they may be unsecured

Disqualification of Directors

a director found to have conducted the affairs of an insolvent company in an "unfit" manner may be disqualified, on application to the court by the DTI, from holding any management position in a company for between 2 and 15 years.

Fixed Charge

a fixed charge is a form of security granted over specific assets, preventing the debtor dealing with those assets without the consent of the secured creditor. It gives the secured creditor a first claim on the proceeds of sale, and the creditor can usually appoint a receiver to realise the assets in the event of default

Floating Charge

a floating charge is a form of security granted to a creditor over general assets of a company which may change from time to time in the normal course of business (e.g. stock). The company can continue to use the assets in its business until an event of default occurs and the charge becomes a fixed charge over the assets

Fraudulent Trading

where a company has carried on business with intent to defraud creditors, or for any fraudulent purpose. It is a criminal offence and those involved can be made personally liable for the company's liabilities

Going Concern

basis on which insolvency practitioners prefer to sell a business. Effectively it means the business continues, jobs are saved, and a higher price is obtained


a legal commitment to repay a debt if the original borrower fails to do so. Directors may give guarantees to banks in return for the bank giving finance to their companies. Companies in a group may guarantee each others loans

Individual Voluntary Arrangement (IVA)

a voluntary arrangement for an individual is a procedure whereby the person comes to an arrangement with his creditors as to how their debts will be discharged. Such a scheme requires the approval of the court and is under the control of a supervisor

Insolvency Practitioner (IP)

a person authorised by an approved body to act as an IP. The only people who may act as office holder in an insolvency proceeding


the state of not being able to pay one's debts as they fall due or having an excess of liabilities over assets

Insolvent Liquidation

a company goes into insolvent liquidation if it goes into liquidation at a time when assets are insufficient for the payment of its debts and other liabilities and the expenses of liquidation

Interim Order

an individual who intends to propose a voluntary arrangement to his creditors may apply to the court for an interim order which, if granted, precludes bankruptcy and other legal proceedings whilst the order is in force


right to retain possession of assets or documents until full settlement of a debt


the procedure whereby the assets of a company are gathered in and realised, the liabilities met and surplus, if any, distributed to members

Liquidation Committee

a committee of creditors who receive information from the liquidator and sanction some of his actions


the person appointed to deal with the assets and liabilities of the company or partnership once the resolution to wind up has been passed or a compulsory winding up order has been made

LPA Receiver (Law of Property Act 1925 receiver)

a person appointed to take charge of a mortgaged property by a lender whose loan is in default, usually with a view to sale or to collect rental income for the lender

Members' Voluntary Liquidation (MVL)

a solvent liquidation where the shareholders appoint the liquidator to realise assets and settle all the company's debts in full within 12 months


breach of duty in relation to the funds or property of a company by its directors or managers


the person chosen by the individual or corporate debtor to report on the debtor's proposals for an IVA or CVA

Office Holder

a qualified insolvency practitioner who holds the following posts: liquidator, provisional liquidator, administrator, administrative receiver, supervisor of a voluntary arrangement, or trustee in bankruptcy

Official Receiver (OR)

the civil servant employed by the Department for Business, Innovation and Skills (formerly known as the Department for Trade and Industry) to head the regional offices whose responsibilities cover bankruptcies and compulsory liquidations

Onerous Property

unprofitable contracts, or property which is unsaleable or not easily saleable or which might give rise to a continuing liability. Such property can be disclaimed by a liquidator or a trustee in bankruptcy


a payment or other transaction in the six month to two year period preceding a liquidation, administration or bankruptcy, which places a creditor or a person connected with the insolvent, in a better position than they would have been otherwise. A liquidator, administrator or trustee in bankruptcy may recover any sums which are found to be preferences

Preferential Creditor

defined in Schedule 6 of The Insolvency Act 1986. Has priority over ordinary creditors when funds are distributed by a liquidator, administrative receiver or trustee in bankruptcy

Proof of Debt

the document submitted in an insolvency to establish a creditor's claim.


a creditor who claims is referred to as "proving" for his debt, and the document by which he seeks to establish his claim is his "proof"

Provisional Liquidator

the person appointed by the court to deal with the affairs of the company until a compulsory winding up order is made


the authority given by a creditor or member to another person (proxyholder) to attend a meeting and speak and vote at a meeting on their behalf

Reservation of Title or Retention of Title Agreement

an agreement for the sale of goods to a company under which, if the seller is not paid and the company is wound up, the seller will have priority over all other creditors of the company in respect to the goods

Secured Creditor

a creditor with specific rights over some or all of the debtor's assets in the event of insolvency. In essence he is paid first from the secured assets


a charge or mortgage over assets taken to secure payment of a debt. If the debt is not paid, the lender has a right to sell the charged assets. The most common example is a mortgage over a property

Shadow Director

a person who is not formally appointed as a director, but in accordance with whose directions or instructions the directors of a company are accustomed to act

Statutory Demand

a formal notice requiring payment of a debt exceeding 750 within 21 days, in default of which bankruptcy or liquidation proceedings may be commenced without further notice


the person appointed to supervise the implementation of the IVA or CVA

Transaction at an Undervalue

a transaction in which the consideration received is significantly less than that given. In certain circumstances such a transaction can be challenged by an administrator, a liquidator or a trustee in bankruptcy

Undischarged Bankrupt

someone against whom a bankruptcy order has been made and who has not been discharged from bankruptcy

Unsecured Creditor

any creditor who does not hold security and therefore the last to receive payment, ahead only of shareholders

VAT Bad Debt Relief

the relief obtained in respect of the VAT element of an unpaid debt. Previously available only when the debtor became insolvent, relief is now available on any debt unpaid for more than 6 months.

Voluntary Liquidation

the placing of the company into liquidation by resolution of the members

Winding-Up (or liquidation)

the procedure whereby the assets of a company are realised, the liabilities met and the surplus, if any, distributed to members

Winding-Up Order

the order made by the court for a company to be placed in compulsory liquidation

Winding-Up Petition

a winding-up petition is a petition presented to the court seeking an order that a company be put into compulsory liquidation

Wrongful Trading

applied to companies in liquidation where directors allowed the company to continue trading in circumstances where they should have concluded that there was no reasonable prospect that the company would avoid going into liquidation. The directors involved may be made personally liable to make a contribution to the company's assets

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