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...

Distressed and Accelerated Asset Sales: Legal Framework, Directors’ Duties, Risk Allocation and Process (England and Wales)

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

General overview of asset sales

Whether a buyer acquires assets from a solvent owner, or from a distressed seller subject to a formal Insolvency process in the asset transaction context, a range of differing legal and practical issues and considerations will arise for those involved on all sides in practice. The Insolvency Act 1986 (IA 1986) sets the rules and regulates various formal insolvency procedures affecting both corporate bodies and individuals alike in defined circumstances. In England and Wales, the principal corporate procedures are Administration and Liquidation in particular:

if the company is in liquidation (compulsory or voluntary) and the appointed liquidator cannot sell the business as a going concern, the liquidator will realise the insolvent company’s assets—ideally as a single job lot where feasible and appropriate, otherwise piecemeal where necessary as needed—to ultimately maximise the funds available for distribution to creditors
when a company enters administration, the administrator assumes control of the company’s assets from the directors, with the aim of meeting one of the statutory purposes of administration (see Practice Note: Administration—an introductory guide). In some cases, and from time to time, the administrator will secure the best value for the company’s assets by using a pre-pack sale process...

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Tim Carter

Stevens & Bolton LLP

Tim advises on all aspects of restructuring and corporate and personal insolvency, including from corporate simplification projects to distressed business transations. His clients range from insolvency practitioners, corporates, stakeholders and other investors to directors and individuals. He also has expertise in matters involving insolvency litigation.Tim is head of the restructuring and insolvency practice, having been a partner since 2010.Tim is a member of INSOL, the International Bar Association (IBA) and ABI (American Bankruptcy Institute). He speaks at seminars/webinars and writes articles for various legal and industry publications including Insolvency Intelligence, Accountancy Today and Accountancy Age. He also provides comment for the national press including The FT, The Independent and The Guardian....

Louise Corcoran

Stevens & Bolton LLP

Louise advises a wide variety of clients, including insolvency office-holders, lenders, companies and directors, in relation to the full spectrum of insolvency and restructuring matters. Louise has experience of debt restructurings, formal insolvency processes, asset/business acquisitions from distressed companies and corporate reorganisations. She also regularly provides advice on validity of security, directors’ duties and security enforcement strategy.Louise trained and qualified at a City firm, working there for several years following qualification. She joined the restructuring & insolvency practice at Stevens & Bolton in 2020. ...

Web page updated on 21/05/2026

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