Insolvent estate meaning

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...

Checklist and timeline This concise checklist and timeline is prepared on the footing that proceedings are brought under sections 238 and/or 239 of the Insolvency Act 1986 (IA 1986) by an administrator or liquidator, and not by any assignee of the claim. Step/action: Review the events leading to the company’s insolvency and the factors underpinning the claim(s) against the respondent(s) (typically the recipients of the relevant payments/transactions). This involves securing the company’s books and records, accounting data/statements and bank statements, and interviewing directors, former directors, and any person with knowledge of the promotion, formation, business dealings, affairs or property of the company. Note that if the office-holder signals a claim against the respondent(s), they risk losing investigative powers under IA 1986, ss 235–236 in relation to that claim. Time (days): No limit (subject to limitation). Section/rule: IA 1986, ss 234–236, 238, 239; Cloverbay Ltd (joint administrators) v Bank of Credit and Commerce International SA [1991] Ch 90, [1991] 1 All ER 894. ...

Checklist This checklist concerns claims under sections 212–214, 246ZA and 246ZB of the Insolvency Act 1986 (IA 1986), brought by an insolvency office-holder. For more detail on claims under IA 1986, ss 212–214, 246ZA and 246ZB in general, refer to the following Practice Notes: Misfeasance claims under section 212 of the Insolvency Act 1986 Fraudulent trading claims under sections 213 and 246ZA of the Insolvency Act 1986 Wrongful trading claims under sections 214 and 246ZB of the Insolvency Act 1986 Step/action Time (days) Section/rule Examine the events and context that led to the company’s insolvency and the issues underpinning any claim against the respondent(s). This entails securing the company’s books and records, and interviewing current and former directors, as well as any individuals holding information about the company’s promotion, formation, business, dealings, affairs or property. Note that if the office-holder intimates a claim against the respondent(s), they may jeopardise the investigative powers under IA 1986, ss 234–236 in...

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 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...

This flowchart outlines the prerequisites that need to be met to prove a misfeasance claim...

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...

Manolete Partners Plc v Howarth [2025] EWHC 2294 (Ch) What are the practical implications of this case? This judgment marks a significant victory for company directors and a sharp reminder to office‑holders and those pursuing claims on their behalf: contemporaneous records are paramount. The court condemned the failure to retain and produce meeting notes, emails and working papers, noting that gaps in the paper trail can justify adverse inferences. Insolvency practitioners should, therefore, keep meticulous files of the advice provided and the decisions taken. The court also affirmed that directors are entitled to place reliance on insolvency specialists’ guidance. Where a director behaves openly and follows the directions of a CVA supervisor, later accusations of preference or undervalue are harder to sustain. The evidential onus accordingly returns to the applicant, who must prove misconduct with cogent evidence. Further, the ruling indicates that salary‑for‑loan‑swap arrangements can be valid and commercially rational where structured to minimise PAYE/NIC and where they substitute, rather than add to, salary. Finally, the decision sounds a...

Practice Note: Preferences under section 239 of the Insolvency Act 1986 Refer to the Practice Note covering preferences under section 239 of the Insolvency Act 1986 for guidance. For a summary on such claims, see the following: Claims by an insolvent estate or its insolvency office-holder—overview...

This Practice Note This Practice Note offers a summary of the categories of parties that may take part in litigation in England and Wales, whether as claimants or defendants, together with the principal procedural matters and practical points their legal advisers should consider. It outlines who may sue or be sued and the implications for case management and strategy. Corporations Partnerships Sole traders Unincorporated associations Children Insolvent individuals or companies Groups The estate of a deceased party Litigants in person It is crucial that party status aligns with the issues to be determined. In Haque (representative/member of Muttahida Quami Movement Pakistan unincorporated association) v Hussain, the defendants were sued as trustees but advanced a defence which the court held could be pursued only in their capacity as members of an unincorporated association, not as trustees. At [27], the judge noted that, in principle, the active defendants should have recognised this within stage one of the...

Limitation periods Limitation periods describe the window within which a claim must be issued. The rules are contained in the Limitation Act 1980 (LA 1980), which sets out different time limits for various causes of action. In an insolvency setting, claims are commonly grouped into three types: actions founded on a 'speciality' carry a 12-year period. Speciality claims include those arising from a statutory cause of action and typically concern recovery of property, such as setting aside a transaction in insolvency where the remedy is not simply the payment of money claims to recover a sum of money under statute have a six-year period claims for which no limitation period applies A limitation clock will usually start on the date the cause of action accrues. That position applies where the claim stems from the debtor’s own cause of action. For instance, if an office-holder seeks to recoup unlawful dividends for a company, time runs from the date of each unlawful distribution,...

This Practice Note covers: the impact of an insolvency process on ongoing litigation where the debtor, bankrupt or insolvent company is a claimant or defendant how an insolvency process interacts with an arbitration agreement binding the debtor, bankrupt or insolvent company additional considerations in a cross-border setting Personal insolvency What happens when the bankrupt is a claimant in ongoing proceedings? The presentation of a bankruptcy petition, whether by a creditor or by the debtor, has no legal consequence for proceedings already on foot where the debtor is the claimant. Once a bankruptcy order is made and a trustee in bankruptcy (the trustee) is appointed, most causes of action in which the bankrupt has an interest vest in the trustee under section 306 of the Insolvency Act 1986 (IA 1986). In such circumstances, it is the trustee, rather than the bankrupt, who has standing to carry on the claim. The trustee will proceed only if that course best serves the interests...

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). ...

INSOLVENCY ACT APPLICATION NOTICE Note: Use with an application notice template compliant with the Insolvency (England and Wales) Rules 2016, SI 2016/1024 (Form IAA), IR 2016, r 1.35... Case No: [insert]. [In the High Court of Justice, Business and Property Courts (Insolvency and Companies List (ChD)) in England and Wales or in [location]; or in the County Court at [location], Business and Property Work]... In the matter of [bankrupt’s name] (In Bankruptcy) and the Insolvency Act 1986. Between [Applicant(s)] and [Respondent(s)]. Application under section 284... Applicant(s): [names/addresses]. Respondent(s): [names/addresses]. The application concerns [details of the relevant bankruptcy]. To be heard by [level of judge] at [court/hearing centre]. Within existing insolvency proceedings? YES/NO. Court reference: [insert]... Declaration that [the disposition] is void under section 284. Order restoring the position as if the disposition had not occurred. Order that the Respondent(s) pay the Applicant(s)’ costs. Further or other relief as the Court considers appropriate. Grounds: set out in the...

Although both liquidators and administrators may pursue a wrongful trading action under sections 214 or 246ZB of the Insolvency Act 1986, respectively, this Precedent is prepared principally from the standpoint of a liquidator advancing such proceedings...

If a lease was granted at undervalue, you are the 3rd owner, and you knew it was at undervalue, if creditors ask for an order returning the property to the original owner you cannot claim relief? Transactions at an undervalue (TUVs) are regulated by the Insolvency Act 1986 (IA 1986). The relevant provisions are: sections 238, 240 and 241 of the IA 1986 for companies sections 339 to 342 of the IA 1986 for individuals These powers are available to trustees in bankruptcy, liquidators (in both compulsory and voluntary liquidations), and administrators. They permit the office-holder to review dealings made by the insolvent person or company in the lead-up to insolvency and to assess whether assets should be recovered for the insolvent estate. In particular, an order under: section 241 of the IA 1986 (for companies), or section 342 of the IA 1986 (for individuals) cannot be made against the other party to a...

Individuals who have the right to obtain a grant in an estate may opt not to extract it. It is generally uncommon for those entitled to secure letters of administration for an insolvent estate to proceed, save where commencing, or defending, proceedings on behalf of or against the estate could deliver a material benefit to it. Where such a benefit exists, the persons listed in the Non-contentious Probate Rules 1987 (SI 1987/2024), rule 22, may apply. If there is an eligible person within that list who is able to take a grant, they are entitled to renounce that entitlement, and that may well be the safest course in circumstances where there is an insolvent estate in such cases...