|
.........................................................................................
DEFINITIONS
OF INSOLVENCY TERMS AND EXPRESSIONS (England/Wales)
These
definitions are brief summaries of the Insolvency Act 1986
and are intended as a guide only. We would always recommend
you seek professional advice from an Insolvency Practitioner
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.
Bankrupt
Someone against whom a bankruptcy order has been made and
who has not been discharged from bankruptcy.
Bankruptcy
Order
The court order making an individual bankrupt (this replaces
the concept of the receiving order and adjudication of bankruptcy
in the old Act cases).
Charge
The appropriation of real or personal property for the discharge
of a debt without giving the creditor any property in, or
possession of, the subject of security.
Charging
Order
Court order placing restrictions on the disposal of certain
assets, such as property or securities, given after judgement
and give priority of payment over other creditors.
Company
Voluntary Arrangement (CVA)
A voluntary arrangement for a company is a procedure whereby
a plan of reorganisation or composition in satisfaction of
debts, is put forward to creditors and shareholders. There
is limited involvement by the court and the scheme is under
the control of a supervisor.
Court-Appointed
Receiver
A person not necessarily a licensed insolvency practitioner,
appointed to take charge of assets usually where they are
subject to some legal dispute. Not strictly an insolvency
process, the procedure may be used other than for a limited
company, e.g. to settle a partnership dispute.
Debenture
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. Often also referred to as a floating
charge, and the lender is often referred to as the debenture
holder.
Individual
Voluntary Arrangement (IVA)
A voluntary arrangement for an individual is a procedure whereby
the person comes to an arrangement with their creditors in
how their debt will be discharged. Such a scheme requires
the approval of the court and is under control of a supervisor
and insolvency practitioner.
Insolvent
The state of not being able to pay one's debts as they fall
due or having an excess of liabilities over assets. (probably
90% of the adult population in this country or indeed the
world are insolvent in real terms).
Insolvency
Practitioner (IP)
Person authorised by one of the chartered accountancy bodies,
the law societies, the insolvency practitioners association
or department of trade. The only person who may act as office
holder in an insolvency proceeding.
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.
Judgement
Recognition of a debt given by a court.
Lien
Right to retain possession of assets or documents until settlement
of a debt is made.
Liquidation
The procedure whereby the assets of a company or partnership
are gathered in and realised, the liabilities met and surplus,
if any, distributed to creditors.
Liquidator
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.
Mortgage
A transfer of an interest in land or other property by way
of security, redeemable upon performing the condition of paying
a given sum of money.
Nominee
The person chosen by the individual or corporate debtor to
report on the debtors proposals for an IVA or CVA.
Official
Receiver
A civil servant employed by DTI to head the regional offices
whose responsibilities cover bankruptcies and compulsory liquidations.
Petition
A written application for relief or remedy to the court.
Proof
of Debt
The document submitted in an insolvency to establish a creditors
claim, it may be informal (by letter) or in a prescribed form
for bankruptcy and compulsory liquidations.
Proxy
The authority given by a creditor or member to another person
(proxy holder) to attend a meeting and speak and vote at a
meeting on behalf of the creditor or member.
Receivership
The general term applied when a person is appointed as a receiver
or administrative receiver over certain assets.
Security
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 charge assets. Security documents can be very complex.
The most common example is a mortgage over a property.
Statutory
Demand
A formal notice requiring payment of a debt exceeding £750.00
within 21 days, in default of this demand bankruptcy or liquidation
proceedings may be commenced without further notice.
Unsecured
Creditor
Strictly, any creditor who does not hold security. More commonly
used to refer to an ordinary creditor who has no preferential
rights, although, in fact preferential creditors will almost
always be unsecured. In any event, the last in the queue,
ahead only of shareholders.
|
