Civil Litigation Videos

Date when Video was Published: 01/07/2017

Personal Insolvency:

There are two main types of insolvency procedure applicable to individuals:

1. Individual voluntary arrangements,
2. bankruptcy

Individual insolvency is governed by Insolvency Act 1986 and Insolvency Rules 1986, SI 1986/1925 subject to the supervision of the High Court (Chancery Division) or designated county courts.

Individual voluntary arrangements: An IVA allows an insolvent debtor to obtain a moratorium on his debts and to repay his creditors in a structured way.

Bankruptcy: Bankruptcy discharges an individual from debt, and divides his assets amongst his creditors. .

Non-bankruptcy forms of personal insolvency used in smaller cases include: administration orders under the County Courts Act 1984, where a debtor cannot satisfy a judgment for £5000 or less, and asks the court to make such an order, and debt relief orders, confined to cases where the debtor's liabilities are not over £15000 and his assets not over £300

Corporate Insolvency

A company becomes insolvent if it does not have enough assets to cover its debts and/or it cannot pay its debts on the due dates.

Companies in financial difficulty may be subject to various insolvency procedures:

1. company voluntary arrangements (CVAs)
2. administration
3. administrative receivership
4. voluntary winding-up (by creditors or members)
5. compulsory winding-up (by the court)

Company voluntary arrangement (CVA)

A company's directors may propose and negotiate a CVA with its creditors. Once agreed, a CVA binds and entitles creditors to repayments of less than the full debt value, over a period of up to 5 years. It requires consent from over 75% of creditors, and must have the consent of secured creditors.

Administration

An administrator may be appointed either by out of court, either by the directors or by the holder of a debenture created on or after 15 September 2003, or by the court, on application by the directors or by any creditor. Administration affords protection whilst a recovery scheme is implemented.

Administrative receivership

A secured creditor under a qualifying floating charge created before 15 September 2003 may, on default, appoint an administrative receiver to take possession of the assets to recover the debt. The effect is that the directors' powers are suspended and unlike administration, there is no statutory moratorium of proceedings against the company.

Winding up

Winding up (also known as liquidation) means the dissolution of a company. It may be voluntary (by the members), either by way of a members' voluntary liquidation where the company is solvent, or by creditors' voluntary liquidation where it is not.

To speak to one of our experienced lawyers please call on 0207 923 4020 or visit us at: www.duncanlewis.com. We look forward to hearing from you

Disclaimer

This video content was created on 01/07/2017 to provide an overview of the legal position and the information was correct at the time this video was created. This video has been produced for purposes of generic information and marketing purposes only. While the information on this site is about legal issues, it is not intended as legal advice or as a substitute for the particularised advice of your own legal advisor. Please consult one of our lawyers to provide you with advice and assistance on any matters touched on this video. Viewing of this video does not create legally binding advice and does not create a retainer with Duncan Lewis Solicitors. This video is Copyrighted at Duncan Lewis Solicitors 2017. Any illegal reproduction of this content is prohibited and will result in immediate legal action.