This is an insolvency process whereby a company is placed under the control of a licensed Insolvency Practitioner. It can be commenced by the Directors, floating charger holders or the company itself by filing a ‘Notice of Intention to Appoint’ or ‘Notice of Appointment’ at Court, or in certain circumstances, by making an application to the Court. The purpose of administration is to save the company as a going concern, or if that is not possible, to achieve a better result for creditors than in a liquidation, or, if neither is possible, to realise property to enable funds to be distributed to secured or preferential creditors.


Administration Order

A Court order which places a company that is, or is likely to become, insolvent under the control of an administrator following an application 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 re-organisation of the company, or ensure the most advantageous realisation of its assets whilst protecting it from action by its creditors.


Administrative Receiver

An Insolvency Practitioner appointment over the whole of a company’s assets by the holder of a floating charge to recover monies owed to the lender. The administrative receiver can carry on the company’s business and sell the business and other assets comprised in the charge to repay the secured and preferential creditors. Administrative receivership is increasingly rare, as it is only available where the security pre-dates 15 September 2003.



A licensed Insolvency Practitioner appointed to manage the affairs of a company to achieve the purpose of administration.


Antecedent transactions



Various types of claims brought by an Insolvency Practitioner for the purpose of seeking to recover assets for the benefit of the insolvent estate, including breach of duty, misfeasance, wrongful trading, fraudulent trading.



The formal process required to bring matters before the Court.



Payments which have fallen due and which have not been paid.



Anything owned by an individual or corporate, including tangible items (property, cash at bank, shares) and intangible (goodwill, intellectual property).



An individual against whom a bankruptcy order has been made by the Court, and who has not been discharged from bankruptcy.



The process of dealing with the estate of a bankrupt.


Bankruptcy Order

A Court order making an individual bankrupt, where the individual is unable to pay his debts and where the property owned by him is then realised for distribution amongst his creditors.


Bankruptcy Restrictions Order

Order made against an individual prohibiting them from engaging in certain conduct, activities etc.


Bona Vacantia

On the dissolution of a company, any property which the company still owned at the date of dissolution, vest in the Crown as bona vacantia.


Book debt

Money owed to creditors for goods or services that they have provided to the debtors.


Charge holder

The party who holds the security over assets of a debtor.


Charging Order

Court Order placing restrictions on the disposal of certain assets, such as property or securities, given after a judgment has been granted, and gives priority of payment to the secured creditor over other creditors.


Company Voluntary Arrangement (CVA)

A legally binding agreement between a company and its creditors to repay some or all of its debt over a period of time.


Compulsory Liquidation

Liquidation commenced by order of the Court, where a creditor has petitioned the Court for the winding-up of the company.


Court-appointed Receiver

A person, not necessarily a licensed insolvency practitioner, appointed to take charge of assets usually where they are subject to litigation and to preserve them pending the outcome of the case. This is not an insolvency process.



The party who whom a debtor owes, or will owe money to, in the future or on a certain event occurring.


Creditors’ Meeting

Meeting of creditors of a debtor. Such meetings are generally convened by the shareholders of a corporate debtor who have resolved that the debtor should be placed into liquidation; see CVL.


Creditors’ Voluntary Liquidation (CVL)

A process relating to an insolvent company which is commenced by resolution of the shareholders, but is under the effective control of creditors, who can choose the liquidator.



Monies owed to a party for goods or services provided.



Any person who owes money to another.



A document recording 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. Where a company’s principal secured creditor is a bank, a debenture in favour of the bank is likely to create fixed and floating charges over all of the company’s assets.



A Director will be disqualified if he is found to have conducted the affairs on an insolvent company in an ‘unfit’ manner.  As a result of disqualification, the individual is not permitted to hold any management position in a company for between 2 and 15 years, and faces criminal sanctions and personal liability for the new company’s debts if they contravene the disqualification order. A disqualification undertaking given to avoid the Court action has the same legal effect.


Dissolution (also Dissolution)

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


Fixed charge

A form of security granted over specific assets, preventing the debtor from dealing with those assets without the consent of the secured creditor.


Floating charge

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). Companies can create floating charges; individuals cannot.


Floating charge holder

The party who holds the benefit of a floating charge.


Fraudulent trading

Running a company with intent to defraud creditors. A criminal offence. A liquidator can sue any person who is responsible for fraudulent trading.


Income Payments Order (or Undertaking)

Order (or agreement) requiring the individual declared bankrupt to make payments from their surplus income to the Trustee for the benefit of the Bankruptcy Estate.


Individual Voluntary Arrangement (IVA)

A procedure whereby the person comes to an arrangement with their creditors in how their debt will be put forward to creditors, which is under the control of a supervisor who must be an insolvency practitioner. Such a scheme, to be put into effect, requires the approval of 75% by value of the creditors who vote.


Insolvency (also Insolvent)

The state of not having enough assets to meet all debts, or being unable to pay debts as and when they are due. If a creditor can establish that an individual or company is insolvent, he or she will be able to present a bankruptcy or winding-up petition.


The Insolvency Act 1986

The primary legislation governing insolvency law and practice.

Insolvency Practitioner (IP)

A person licensed by a recognised professional body to act as an office-holder in an insolvency proceeding. Only an insolvency practitioner may act as an office holder (i.e. liquidator, administrator, administrative receiver, nominee, supervisor, trustee in bankruptcy).


Joint liability

Where more than one party has entered into credit agreement, each party named in the agreement will be liable for the whole amount.



Order of the Court determining a liability of one party (not necessarily the defendant) to the other. If the Order does not state the time period within which the Judgment sum is to be paid, the default period is 14 days. An unsatisfied judgment can be used to demonstrate the insolvency of the party liable to pay the judgment sum.


Legal Charge (or Mortgage)

A type of security which are secured against assets or property.




The Debts and obligations of debtors i.e. mortgages, bank loans etc.



The right to retain possession of assets or documents until a debt is discharged.



The procedure whereby a company has its assets realised and distributed to satisfy, insofar as it is able, its liabilities and to repay its shareholders.



A licensed Insolvency Practitioner appointed to oversee the liquidation of a company.


Members’ Voluntary Liquidation (MVL)

A solvent liquidation of a company, where the shareholders appoint a liquidator to realise assets and settle all of the company’s debts.



A claim brought against a Director of a company, which is in liquidation, for loss caused to the company by the Director acting outside of his authority granted by the company.



A transfer of an interest in land or other property by way of security, redeemable upon discharging the sum advanced by the charge-holder.



A licensed Insolvency Practitioner chosen by the individual or corporate debtor to conduct the process of putting a proposal for a voluntary arrangement to the creditors. The nominee’s duties will include writing a report and comments on the proposal, and convening a meeting of creditors to consider it.


Office holder

See Insolvency Practitioner.


Official Receiver (OR)

An official employed by the Insolvency Service, an executive agency of the Department of Business, Innovation and Skills, who is responsible for many aspects of insolvent estates.


Personal Guarantee

Given by an individual that money borrowed and covenants entered into by the debtor to the creditor will be repaid and honored by the guarantor to the creditor.



A written application to the Court for an individual to be declared bankrupt or a corporate to be wound-up.



Companies or individuals give a preference if they do something, acting on a desire to prefer the creditor, within a specified period of time prior to onset of their insolvency, which puts the creditor in a better position on a bankruptcy or winding up. A liquidator or trustee in bankruptcy can apply to Court for an order restoring the position to what it was before the preference.


Proof of debt

A document submitted by a creditor to the licensed Insolvency Practitioner or official receiver confirming the sum owed.


Proxy form

A document given to a creditor with the right to vote at a creditors’ meeting.



The general term applied when a person is appointed as a receiver or administrative receiver over certain assets.



The act of restoring a dissolved company to the register at Companies House.


Secured creditor

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.


Statement of Affairs

A document which records the assets and liabilities of a company when it is placed into a formal insolvency procedure, prepared by the Directors of the company with the assistance of the Insolvency Practitioner.


Statutory Demand

A formal notice requiring payment of a debt exceeding £750 within 21 days. Non payment of a statutory demand is often used by creditors as the main evidence of a debtors’ insolvency, which is required to present a petition against the debtor.



An Insolvency Practitioner who is appointed to supervise the conduct of a Voluntary Arrangement.


Transaction at undervalue

Where a company or individual makes a gift or enters into a transaction in which the value to them is significantly less than the value to the other party.  Transactions at undervalue can be challenged by an office holder.


Unsecured creditor

Any creditor who does not hold security. This class of creditor will rank last of all in cases where a dividend is likely to be paid.


Validation Order

Where a debtor faces a petition, that debtor is unable to dispose of any assets pending the hearing of the petition, and the debtors bank accounts are likely to be frozen on the debtor’s banker becoming aware of the existence of the petition. To permit the bank account being operated, and to be permitted to dispose of an asset, a Validation Order from the Court must be obtained.


Vesting Order

An Order of the Court which vests ownership in land in the party who made the relevant application.


Voluntary arrangements

See individual voluntary arrangement (IVA) and company voluntary arrangement (CVA). An arrangements whereby a debtor enters into a formal arrangement with its creditors, whereby certain actions will be taken and monetary contributions made by the debtor, in order for a ‘dividend’ to be paid the creditors as recorded in the formal ‘Voluntary Arrangement Proposal’. An Insolvency Practitioner is appointed as the ‘Supervisor’ to ensure the debtor complies with the terms of the arrangement; failure will result in the Voluntary Arrangement failing, and likely result in a petition being brought against the debtor.


Voluntary liquidation

See creditors’ voluntary liquidation and members’ voluntary liquidation.



See liquidation.


Winding-up Order

An order made by the Court for a company to be placed in compulsory liquidation.


Winding-up petition

A petition presented to the Court seeking an order that a company be put into compulsory liquidation.


Wrongful trading

Where the Directors of a company know or should know that it has no reasonable prospect of avoiding insolvent liquidation, but they continue to trade they and that continued trade causes losses to creditors.