Jurisdiction(s):
United Kingdom

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...

Comprehensive glossary of UK restructuring and insolvency terms, covering Companies Act schemes, Part 26A plans, IA 1986 processes, and cross‑border concepts including COMI, UNCITRAL and assimilated EU rules.

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

This glossary sets out numerous expressions regularly encountered in the restructuring & insolvency sphere. Words shown in bold within definitions are themselves explained in other entries in this glossary as well.

A

Article X

The MLIJ contains a single provision named Article X, aimed at jurisdictions that have already implemented the MLCBI, like England, or are weighing its adoption. Article X states: ‘Not withstanding any prior interpretation to the contrary, the relief available under [insert a cross-reference to the legislation of this State enacting Article 21 of the UNCITRAL Model Law on Cross-Border Insolvency] includes recognition and enforcement of a judgment’ (see Practice Note: UNCITRAL model law on recognition and enforcement of insolvency-related judgments (MLIJ): Article X).

asset-backed security (ABS)

A form of security anchored by asset pools, for example loans, leases, and credit card receivables.

Assimilated law

From 1 January 2024, ‘retained law’ has been retitled ‘assimilated law’. The body of domestic law originally arising from EU obligations, created by the European Union (Withdrawal) Act 2018 (EU(W)A 2018) as retained EU law, is, from 1 January 2024, referred to as ‘assimilated law’ pursuant to the Retained EU Law (Revocation and Reform) Act 2023 (REUL(RR)A 2023) from that date onwards...

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Web page updated on 21/05/2026

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