Insolvency meaning

Options for landlord This checklist outlines the choices open to a landlord of commercial premises where the tenant is an insolvent individual, and explains the effect of restrictions operating under the various insolvency regimes. Where a landlord of a commercial property seeks to take steps against an insolvent tenant who is an individual, this checklist should then be referred to to confirm whether the landlord is permitted to pursue such action...

ARCHIVED: This Practice Note is archived and is no longer maintained. A bank loan is treated as a non-performing loan (NPL) if more than 90 days pass without the borrower making the agreed instalments or interest payments. Banks experienced an accumulation of NPLs in their books when borrowers' inability to repay was intensified by the financial crisis and subsequent recessions. When NPLs are proportionately high, banks' capacity to manage the riskiness of their lending is diminished. NPLs are a supervisory priority for the European Central Bank (ECB), which monitors the overall level of NPLs across euro area banks. Under the supervisory review and evaluation process (SREP), the ECB assesses whether individual banks adequately manage loan risk and whether they have suitable strategies, governance arrangements and processes in place. The ECB also regularly undertakes co-ordinated exercises to review the asset quality of the banks it directly supervises—it works with national supervisors to establish a consistent and effective approach to tackling and reducing bad loans, drawing on best practices as set...

Introduction to freezing injunctions and scope of this checklist A freezing injunction (also known as a freezing order) is a temporary court order that prevents a respondent from disposing of or transferring its assets out of the relevant jurisdiction—namely England and Wales—or, in the case of a worldwide freezing order (WFO), from moving them anywhere in the world. The court’s principal aim in granting such relief is to preserve the respondent’s assets so that, if the applicant later obtains judgment against the respondent, there will be assets available for recovery by the applicant and, if necessary, enforcement action. This Checklist explains how to make an application for a freezing injunction where claims are contemplated or already underway in a corporate or personal insolvency context. As the precise circumstances of each matter must be assessed, this Checklist does not claim to be exhaustive; rather, it provides an overview of the key considerations at each stage when seeking an order of this kind. The focus throughout is asset preservation pending determination...

Procurement process flowchart This Procurement process flowchart outlines the sequence a procurement might follow and highlights the factors to weigh and the considerations involved to maintain a transparent and appropriate procedure. It further points to the Precedents on hand to support you through the procurement steps. This Flowchart serves as a worked illustration and is not meant to be exhaustive. While organisations may adopt quite varied approaches, it offers a useful baseline or point of reference. Any contract value amounts shown here are for demonstration purposes only...

This Checklist is applicable when acting for the mortgagee in relation to the taking of a ship mortgage and where the security will be registered in the UK. Request a Transcript of Registry from the UK Ship Register to confirm the vessel’s security status. A charge applies for this and for several other documents noted below; the complete schedule can be found on the UK Ship Register website, and a full list is available there. The mortgagee should verify that the owner holds clear, unencumbered legal title to the ship and that their ownership has been correctly recorded, and confirm that it has been properly registered. Perform a Register of Companies search to confirm the owner’s incorporation in England and Wales. Ascertain whether any mortgages or charges concerning the ship are filed against the owner pursuant to Section 859A of the Companies Act 2006 (CA 2006), and confirm registrations relate to the ship...

This flowchart sets out the process under the FIDIC Red, Yellow and Silver Books, 1999 editions, for defects under: clause 7.5, where Plant, Materials, design or workmanship are discovered to be faulty or otherwise non-compliant with the Contract, and the Employer rejects the relevant Plant, Materials, design or workmanship clause 7.6, when the Employer directs the Contractor to strip out and substitute any non-compliant Plant or Materials, to take out and reperform any other work that does not meet the Contract, or to carry out any work urgently needed to protect the safety of the Works clause 11.1, under which the Contractor must perform all tasks necessary to make good defects or damage, as notified by the Employer on or before the end of the Defects Notification Period clause 12.3, if a Test after Completion is not passed, and clause 11.1(b) concerning the rectification of defects applies (Yellow and Silver Books only) For further details, see Practice Note: FIDIC Contracts (pre–2017...

In this issue: Key DR developments Claims and remedies Costs and funding Cross-border disputes Injunctions Civil appeals New content Dates for your diary Useful information Daily and weekly news alerts Key DR developments CPR updates 174th Practice Direction update effective 5 November 2024: The Master of the Rolls and the Parliamentary Under-Secretary of State for Justice have authorised the 174th Practice Direction (PD) update to the Civil Procedure Rules (CPR). The changes take effect at 11am on 5 November 2024. This PD update amends CPR PD 51ZE (Small Claims Track Automatic Referral to Mediation Pilot Scheme) and CPR PD 51R (Online Civil Money Claims (OCMC) Pilot Scheme), expanding the obligation to engage in integrated mediation in civil matters to money claims submitted via the OCMC service. For more information, see: LNB News 22/10/2024 127—174th Practice Direction update—in force 5 November 2024. Court guidance Damages Claims Pilot under CPR PD 51ZB—updated guidance:...

Thiel-Czerwinke and another (joint liquidators of Courtside Recycling Ltd) v Crabb [2024] EWHC 337 (Ch) What are the practical implications of this case? This ruling underlines the uncompromising obligation on directors to maintain trading records, and accepts that discarding or failing to retain them was, on these facts, a constituent part of the director’s fraudulent design. It also clarifies that once office-holders demonstrate that company assets or cash were transferred to a director, the absence of documents showing that the funds or property were applied for the company’s advantage renders the director liable to repay the whole amount to the company. That outcome applies even though the judge did not doubt that Mr Crabb did in fact use some of the cash when making payments for Courtside... What was the background? Mr Crabb served as the Company’s sole director; the business dealt in scrap metal. For the trading periods from August 2014 to February 2018, the Company submitted VAT returns declaring sales, net of VAT, totalling...

Vesnin v Queeld Ventures Ltd and another company [2025] EWHC 104 (Ch) What are the practical implications of this case? The ruling is of practical and procedural importance for practitioners working on cross-border insolvency and asset recovery. It confirms that a party must show a legitimate interest in the bankruptcy to have standing to resist a common law recognition application—such as a creditor, the bankrupt, or a party with a concrete economic stake in the bankruptcy acting in the same capacity from which that stake arises. A merely commercial or tactical interest—like attempting to thwart a claim to title to shares, as here—is insufficient. Advisers for prospective respondents should therefore consider whether their clients possess the requisite interest in the bankruptcy and advise accordingly. The court did not define what amounts to a tangible economic interest in the insolvency, though possible classes could include: beneficiaries of a trust forming part of the bankrupt’s estate; a secured creditor with rights over assets within the estate;...

This Practice Note sets out the principal tax considerations where creditors move to enforce security over the assets of a distressed company or corporate group. Related Practice Notes in this series address tax issues concerning: acquisitions of distressed debt, and debt restructurings (ie waivers, debt/equity swaps or renegotiations) In addition, Tax and distressed debt—checklist of points to consider distils the main tax points to bear in mind when dealing with distressed debt in general. This Practice Note reviews the enforcement routes open to creditors of troubled businesses and the consequences that may follow. For a detailed look at the loan relationships provisions on debt releases, see: Loan relationships—impairment and debt releases Loan relationships—impairment and debt releases: connected companies Types of enforcement As explained in Practice Note: Tax and distressed debt—debt restructurings, lenders will frequently engage in a restructuring of a distressed group’s debt to help the underlying business continue. Enforcing security over a borrower’s assets...

The Pensions Regulator (the Regulator) The Regulator is an arm’s-length public body set up under the Pensions Act 2004 (PeA 2004). Its authority to impose contribution notices and financial support directions appears in PeA 2004, ss 38–50. Although the Act does not use the label, these provisions are widely known as the Regulator’s ‘moral hazard’ powers. Their purpose is to counter the ‘moral hazard’ arising from the Pension Protection Fund (PPF): the possibility that corporate groups might organise their structures so as to heighten exposure within their pension schemes, comfortable that the PPF would intervene if the employer entered insolvency. The principal moral hazard tools—and the only ones exercised so far—are the power to issue a contribution notice (CN) and the power to issue a financial support direction (FSD). A CN compels the recipient to pay a specified amount into a defined benefit occupational pension scheme. A CN can be issued where the criteria in PeA 2004, s 38 are satisfied. These mechanisms exist to deter behaviour that would...

What is a CVA? A company voluntary arrangement (CVA) is a form of insolvency that permits a company to enter a binding agreement with its creditors to compromise unsecured debts or otherwise agree how its affairs are handled. The directors continue to run the business, under the oversight of an insolvency practitioner. Retailers, particularly those with extensive property portfolios, frequently adopt so‑called ‘landlord CVAs’ to reset rental commitments and shut loss‑making stores. This note outlines how property law and landlord and tenant considerations may emerge under such a CVA. It highlights provisions commonly included in CVAs and explains how they tend to work in practice. Nevertheless, each CVA will vary according to the precise terms proposed. It is therefore vital to examine the CVA proposal carefully to assess its effect on creditors. This note does not provide detailed guidance on the mechanics of approving and implementing a CVA. For Practice Notes addressing the CVA procedure, see: Company voluntary arrangements—an introductory guide The CVA proposal and...

INSOLVENCY ACT APPLICATION NOTICE Case No: [ insert case number ]. Court: High Court (Business and Property Courts, Insolvency and Companies List (ChD)) OR Business and Property Courts in [ insert location ] OR County Court at [ insert location ] (Business and Property Work). In the matter of [ insert company’s name ] and the Insolvency Act 1986. Parties: [ Insert Applicant(s) ] v [ Insert Respondent(s) ]. Under IR 2016 r 18.23. Parties and addresses: Applicants [ names/addresses ]; Respondents [ names/addresses ]. Application relates to [ details ]. Judge: [ level ]. Venue: [ court/hearing centre ]. Ref: [ number ]. Orders sought: Fix remuneration at £[ insert sum ] plus VAT; disbursements £[ insert sum ]. Costs to be an expense of the [ liquidation/administration ]. Any further order or relief the court considers appropriate. Grounds: witness statement of [ name ], dated [ date ]. Service/notice: [ names/addresses, if any, or none ]. Address for...

Brief details of claim This action is brought under section 423 of the Insolvency Act 1986. The Claimant is the [ insert office held ] at [ insert name of the company ] (the Company). ...

This deed is dated the [ INSERT DAY ] of [ INSERT MONTH AND YEAR ]. Parties The persons whose particulars are set out in the Schedule (the Indemnifiers); and [ Insert names of the Joint Liquidators ] of [ insert name and address of the Joint Liquidators’ firm ] (the Joint Liquidators) BACKGROUND [ Insert name of the company ] (the Company) was incorporated in England and Wales under company number [ insert number ]. [ Insert names of the joint liquidators ] are to be appointed as Joint Liquidators of the Company (the Appointment) by the members via written resolution. In consideration of the Joint Liquidators accepting the Appointment, the Indemnifiers agree to indemnify the Joint Liquidators, together with the members and employees of the Joint Liquidators’ firm, in the manner set out herein...

In partnership with Alexander Stewart of Hogarth Chambers If a limited liability partnership (LLP) becomes insolvent, the preferred view is that members’ entitlements to amounts due under their capital and current accounts are subordinated to the claims of external unsecured creditors. That said, it can be contended that members’ claims for advances or loans made to the LLP—despite being entered in their current accounts—stand on the same footing as those of external unsecured creditors. LLPs are established by the Limited Liability Partnerships Act 2000 (LLPA 2000). In several respects, including insolvency, LLPs are akin to limited companies rather than partnerships; see: Limited liability partnerships (LLPs) and insolvency—overview. Where an LLP is insolvent, it is terminated by voluntary or compulsory winding-up. The winding-up regime under the Insolvency Act 1986 (IA 1986) operates alongside LLPA 2000, s 14 and the Limited Liability Partnerships Regulations 2001 (LLPR 2001), SI 2001/1090, reg 5 and LLPR 2001, SI 2001/1090, Sch 3 (as amended)...

Under section 193 of the Trade Union and Labour Relations (Consolidation) Act 1992 Employers are required to inform the Secretary of State for Business, Energy and Industrial Strategy (BEIS) before issuing any redundancy notices and, in any event: where 20 or more dismissals are contemplated within 90 days, no less than 30 days before the first dismissal takes effect where 100 or more dismissals are contemplated within 90 days, no less than 45 days before the first dismissal takes effect For BEIS notification purposes, the full 30- or 45-day interval must pass before the first dismissal occurs. Notification is made on Form HR1, submitted to The Insolvency Service. For additional details, see Practice Note: Collective redundancy—statutory information and consultation obligations, under the heading Obligation to notify BEIS (Form HR1). As stated in the Advance notification of redundancies: guidance for employers accompanying Form HR1, the notification date is ‘the date on which we receive your completed form’. Forms with any required information...

In this Q&A, we assume that B’s claim is smaller than A’s. Legal process against the company Under paragraph 43(2) of Schedule B1 to the Insolvency Act 1986 (IA 1986), the moratorium prevents any legal process—covering legal proceedings, execution, distress and diligence—from being started or continued against the company or its property without the administrator’s consent or the court’s permission. This wording is wide enough to encompass any remaining actions or steps that might otherwise be taken against the company or its property. Accordingly, B can only bring an action against A with the approval of the administrator or the leave of the court. The purpose of the moratorium (and the interim moratorium) is to safeguard the company and its assets from creditor action during the company’s administration and the pre-appointment period. It bars any steps, actions or processes from being begun or carried on against the company and its property, save with the administrator’s consent (if one is appointed) or the court’s permission. See Practice...