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...

COVID-19: CIGA 2020 temporary restrictions on statutory demands and winding-up petitions, coronavirus test, advertisement stay and retrospective effect—England & Wales and Scotland [Archived]

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

ARCHIVED: This archived Practice Note is no longer updated and is supplied solely for background and reference purposes only.

What is the background to the changes?

The coronavirus (COVID-19) outbreak, together with the ensuing lockdowns and social distancing rules brought in by the UK government, has had a significant impact on companies and the wider economy. On 20 March 2020, ministers ordered the closure of businesses such as restaurants, pubs and leisure centres, and by 23 March 2020 a nationwide lockdown was in place, putting vast areas of the private sector into a deep freeze. Compulsory shutdowns have imperilled the finances of many once-viable firms, and for enterprises already under pressure they proved to be the final straw. To soften the economic fallout of coronavirus and keep the economy on basic life support, the government rolled out a suite of interventions, ranging from financial assistance schemes to statutory change. For more on the aid on offer, see Practice Note: Coronavirus (COVID-19)—summary of government financial support to businesses. To shield commercial tenants, the government signalled plans to bar landlords from exercising rights to forfeit a lease due to unpaid rent or other sums owed under the lease. In turn, certain landlords...

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Web page updated on 21/05/2026

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