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Jurisdiction(s):
United Kingdom
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...
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UK airline insolvency: administration, moratorium, liquidation/receivership, Cape Town Convention, security deposits and liens, repossession and slots, and restructuring under Companies Act Part 26 schemes and Part 26A plans
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Practice notes
This Practice Note forms part of a wider suite of Practice Notes on airline Insolvency; for additional detail, see Practice Notes:
- Guide to airline insolvency—introduction
- Guide to airline insolvency—international considerations and implications for office-holders
Insolvency proceedings
Commencement of insolvency proceedings concerning an airline can carry differing implications for a financier, which will turn on both the category of procedure used and the way in which it is brought. Within the UK, the processes most often encountered in airline insolvencies are administration, liquidation and Receivership (acknowledging that the last is, strictly, a contractual remedy rather than a formal insolvency process). Following the Corporate Insolvency and Governance Act 2020 (CIGA 2020), a company may enter a standalone moratorium intended to provide limited protection from certain creditor claims and enforcement steps. To date, there have been no recorded instances of an airline entering such a moratorium. The UK’s 2015 adoption of the Cape Town Convention constitutes a material concession for secured creditors pursuing repossession of aircraft objects (broadly, qualifying airframes and aircraft engines) where the Convention applies, with the most notable shift being the disapplication in relevant insolvency scenarios under the framework described above, as it operates to prioritise secured recovery in circumstances...
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Web page updated on 21/05/2026
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