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...

Assignment of insurance policies and claims in insolvency: office-holder powers, policy novation v assignment of rights, s136 LPA requirements, restrictions, drafting, and third-party regimes

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

Duties of an office-holder to realise property

insolvency processes (such as administration, liquidation or bankruptcy) involve appointing an insolvency office-holder whose principal duty (for a liquidator or trustee in bankruptcy) is to collect in the insolvent company’s or bankrupt individual’s assets and realise them for the ultimate benefit of creditors. Their central function is to maximise returns to creditors by turning property into cash or value as efficiently as practicable, consistent with their statutory remit. An administrator has authority to do this whilst pursuing one of the three statutory purposes of administration (see Practice Notes: Role, powers, functions and duties of an administrator, Role, powers, functions and duties of a liquidator and Role, powers, functions and duties of a trustee in bankruptcy). In this context, insurance claims—being choses in action—are property capable of realisation for the estate. This Practice Note considers the circumstances in which an office-holder may assign insurance claims and the practical factors relevant to doing so. For general information on contracts of insurance, see Practice Note: General principles of insurance contract law.

Why might an office-holder assign an insurance claim

An office-holder may seek to assign the benefit of an insurance claim for various reasons...

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Matthew Padian

Stevens & Bolton LLP

Matthew qualified with the international law firm Baker McKenzie LLP. He spent over ten years within the Banking and Finance team at its London office advising banks and corporate entities on cross-border debt finance transactions. During the last several years, Matthew has spent increasingly more of his time acting on restructuring and insolvency situations. Now at Stevens & Bolton LLP, Matthew’s practice covers the full spectrum of loan transactions, restructuring and insolvency situations as well as solvent corporate acquisitions and disposals....

Helen Martin

Stevens & Bolton LLP

Web page updated on 29/05/2026

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