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...

Individual Voluntary Arrangements: Creditors’ Decision Procedures, Meetings, Voting Rights, Claim Valuation, Majorities, Appeals, Proxies and SIP 6 (England and Wales)

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

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General

Creditors decide whether, and to what extent, an individual voluntary arrangement (IVA) proposal should be approved. In-person meetings are no longer the default way to reach decisions; the Nominee may instead choose a qualifying decision procedure to obtain creditors’ views on the proposal. These procedures are set out in the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, Pt 15. The relevant procedure or any meeting is overseen by the convener or chair, almost always the nominee; if the nominee cannot attend, a replacement will act on their behalf.

Creditors’ consideration of the proposal

The debtor’s proposal is the foundation of any IVA. IR 2016, SI 2016/1024, r 8.3 specifies the required contents of an IVA proposal. Where no interim order is sought, the nominee must inform creditors of their opinion on the viability of the debtor’s proposal within 14 days of the proposal document being finalised. If the debtor seeks an interim order, the nominee’s report on viability must accompany the debtor’s interim order application. If the court is satisfied, on receiving the...

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Marcus Haywood

South Square Chambers

Web page updated on 21/05/2026

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