Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Insolvency definition

What does Insolvency mean? In practice, insolvency describes a financial state where a debtor cannot meet liabilities when due, triggering remedies such as administration, liquidation or bankruptcy and informing directors’ duties and avoidance claims. For companies in England & Wales, Scotland and Northern Ireland, the Insolvency Act 1986, s 123 sets two alternative tests: - Cash‑flow insolvency: an inability to pay debts as they fall due. The inquiry is practical and forward‑looking, not confined to today’s bills (Re Patrick & Lyon Ltd [1933] Ch 786; BNY Corporate Trustee Services Ltd v Eurosail [2013] UKSC 28). - Balance‑sheet insolvency: liabilities (including contingent and prospective liabilities) exceed assets on...

Claiming After-Acquired Property in Bankruptcy under Insolvency Act 1986 s307: Trustee Powers, Time Limits, Knowledge, and Third-Party Defences (England and Wales)

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

Bankruptcy estate

Under section 306(1) of the Insolvency Act 1986 (IA 1986), the bankrupt’s estate passes to the trustee in Bankruptcy (trustee) immediately upon their appointment, whether that is the official receiver (OR) or an insolvency practitioner (IP). Property transfers automatically, without any conveyance of title, assignment or transfer whatsoever.

The bankrupt’s estate includes:

all property belonging to, or vesting in, the bankrupt at the commencement of the bankruptcy (ie when the bankruptcy order is made), and
any property which, by virtue of IA 1986, Pt IX, is comprised in, or treated as falling within, the estate

‘Property’ is defined in very broad terms. For further reference, see: What vests and does not vest in the trustee in bankruptcy—checklist.

In addition to property that is plainly part of the estate on bankruptcy, there are two principal ways the trustee can augment the property within the estate:

firstly, the trustee can apply to set aside antecedent transactions such as transactions at an undervalue and/or preferences

This Practice Note does not cover antecedent transactions...

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Katherine (Kate) Hallett

Three Stone

Katherine has a broad practice encompassing a wide variety of chancery and commercial litigation, including advisory work. She has particular interest in insolvency and property law.As regards insolvency, Katherine’s practice includes:• petitions for bankruptcy and winding up• applications to set aside statutory demands• validation orders• annulment and rescission applications• applications for possession and sale• actions against officers for misfeasance• transactions at an undervalue, preferences, unlawful dividends etc• challenges to office-holders’ remuneration and expensesKatherine’s property-related work includes:• landlord and tenant disputes (residential and commercial, including ASBO-related matters)• real property (boundary disputes, adverse possession claims, easements and rights of way)• trusts of land matters (including orders for sale)• proprietary estoppel• mortgage repossessions (including mortgage fraud)She is also particularly interested in disputes relating to beneficial interests in property.Katherine’s commercial practice covers:• company law• breach of contract• sale of goods• supply of services• contracts regulated by the Consumer Credit Act 1974• personal guarantees and...

Web page updated on 21/05/2026

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