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...

Monarch Airlines administration (2017) case study: UK airline insolvency—CAA repatriation, leased aircraft and airport liens, and slot allocation litigation—practical lessons

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

ARCHIVED: This archived Practice Note reviews the Administration of Monarch Airlines that occurred in 2017. It is not being maintained and is provided solely for background reference. It forms part of a broader suite of Practice Notes on airline Insolvency. For further details, see:

Guide to airline insolvency—introduction
Guide to airline insolvency—insolvency processes, Receivership, restructuring plans and Schemes of arrangement
Guide to airline insolvency—international considerations

Background and lead-up to administration

Before entering administration on 2 October 2017, Monarch Airlines operated scheduled services for tour operators, travel agents and direct customers, flying to and from five UK airports—Birmingham, Leeds-Bradford, Gatwick, Luton and Manchester—to 44 destinations, the majority in the Mediterranean and the Canary Islands. In common with many carriers worldwide, it faced tough market conditions and undertook a significant restructuring in 2014. The group returned to profit in 2015. However, persistent pressures within the European aviation sector—including terrorist attacks in Western Europe, Türkiye and key North African destinations served by Monarch—resulted in further weakening of the group’s financial position during 2016...

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Mark Craggs

Norton Rose Fulbright

Mark Craggs is a restructuring and insolvency lawyer based in the London office of Norton Rose Fulbright. He advises UK and international insolvency office-holders, banks and other creditors, corporates, directors, pension scheme trustees, government bodies, regulators and other stakeholders on a wide range of contentious and non-contentious matters. Mark is a Fellow of INSOL International and a member of a number of committees of INSOL International (including the Technical Research Committee and the Younger Members Committee). He is also a member of the International Insolvency Institute's NextGen Leadership Program, the Insolvency Lawyers' Association and the Association of Business Recovery Professionals (R3). In 2016, he was selected as one of the "40 Under 40" cross-border restructuring and insolvency lawyers worldwide by Global Restructuring Review. He is described in Legal 500 (2017) as an "excellent all-round insolvency lawyer"....

Web page updated on 21/05/2026

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