A company is considered insolvent if it cannot pay its debts as
and when they fall due. Broadly speaking, there are three main
types of insolvency: administration, liquidation and Company
Voluntary Arrangement (CVA).
Only the court, the insolvent company or a Qualifying Floating
Charge Holder can place a company into administration. The primary
aim of the process is either to rescue of the company, to achieve a
better result for creditors in comparison to other insolvency
methods, or to realise property. During the administration period,
a company may continue to trade and/or have its assets sold. Monies
are then paid to creditors according to their status –
secured creditors are paid first, then preferential, unsecured and
Where the sale of a company's assets are agreed before the
administration has commenced and completed almost immediately after
the start of the administration, this is commonly known as a
The liquidation of a company can either be a voluntary or
compulsory. Unlike administration, a creditor of the company can
petition for the insolvent company to be wound up. During a
liquidation, company assets are realised i.e. turned into cash, and
distributed to creditors to satisfy their debts. As with
administration, creditors are paid out according to their
A liquidator has substantial power to investigate the affairs of
the company and is permitted to bring legal claims where necessary
for the benefit of creditors. Where a company has been wound up,
the Liquidator has a duty to review the director's conduct and
is required to submit a report to the Insolvency Service of its
Company Voluntary Arrangement
An insolvent company can use a CVA to agree a payment plan with
creditors over a fixed period of time. This method is often used
when a company is able to trade out of its debt, for example
because a large contract is due for payment in the near future. It
is still necessary to use an insolvency practitioner in this
process as a formal proposal will need to be drawn up.
A meeting of creditors is generally called and for the CVA to be
approved, 75% of creditors in value must agree to its terms. If a
CVA is accepted, it will bind all creditors, even those did not
attend the meeting or who voted against
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Witnesses can, in various circumstances, be subpoenaed by the Courts of overseas jurisdictions to attend to give evidence by way of depositions within that jurisdiction. So why not take that one step further and ask a foreign court to subpoena the witness to give evidence by live satellite video link to a Court in London? This would be the next best thing to having the witness present in Court. Indeed, the Commercial Court is increasingly amenable to evidence being given in this way (albeit on a
Yesterday, in its quarterly consultation paper (CP 10/15), the FSA formally announced its intention to prevent investment firms using title transfer collateral arrangements (TTCAs) with retail clients.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).