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...

Insolvency in PFI/PF2 Projects: Contractual Remedies, Funders’ Step‑In/Novation, CIGA 2020 Restructuring, Procurement Constraints and Protective Measures

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

$imgtext$

This Practice Note briefly explains insolvency issues in PFI/pf2 projects. It is designed to give restructuring and insolvency practitioners a concise, high-level overview of key contractual terms, restructuring routes, and steps that may safeguard a client’s position, presented in a practical format in routine professional practice.

What are PFI/PF2 projects?

The private finance initiative (PFI) is a form of public–private partnership (PPP) used to commission and deliver a range of public assets and services, such as schools, hospitals, prisons, rail links, roads and social housing across the public sector.

PFI schemes are financed by private sector lenders, with private contractors assuming the burden and risk in relation to design, construction and/or day-to-day operations.

A typical PFI arrangement is long term, enduring for around 25–30 years.

Private Finance 2 (PF2) was launched by the government in December 2012 with the intention of broadening sources of equity and debt funding, enhancing transparency, and lowering procurement costs throughout.

Notably, the government frequently participates as a minority equity investor in PF2 schemes across the programme.

For further background on PFI/PF2 projects, refer to the Practice Notes: Introduction to PFI and PF2, and PFI/PPP terms (Glossary) for guidance.

The parties involved in a PFI/PF2 project...

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

Mathias Cheung

Atkin Chambers

Mathias Cheung is a barrister at Atkin Chambers. He specialises in commercial and construction dispute resolution, including litigation, adjudication and international arbitration. Mathias has acted in a complex TCC dispute regarding the redevelopment of the Rolls Building, and has appeared successfully as junior counsel in Vinci Construction UK Ltd v Beumer Group UK Ltd [2018] EWHC 1874 (TCC). He also appears regularly as sole counsel in the TCC, most recently in DSVG Facades Ltd v Conneely Facades Ltd and McDonald & Anor v D&F Contracts Ltd [2018] EWHC 1600 (TCC).Mathias has extensive experience advising on disputes and adjudications concerning PFI hospital and school projects, which typically involve complex contractual issues in relation to service failures, payment deductions, insolvency and termination. As a native of Hong Kong, Mathias is fluent in both Cantonese and Mandarin. He has recently acted as junior counsel in a...

Web page updated on 21/05/2026

Popular documents

Using the Judicial College Guidelines to assess general damages in personal injury claims

When evaluating a general damages claim, the practitioner ought initially to refer to the Judicial College Guidelines (JCG)...

Tomlin orders in England and Wales: CPR guidance on drafting, confidentiality, approval, variation, enforcement, limitation, CCA issues, court-specific requirements, sample wording and precedents

This Practice Note This Practice Note reviews mechanisms used in settling litigation. A Tomlin order consists of a consent order paired with a schedule. It operates to stay proceedings on terms that have been agreed. The provisions contained in the schedule may remain confidential. This Practice Note describes the scope of confidentiality attaching to the schedule and sets out how it differs from a standard consent order. Sample wording for a Tomlin order is included, alongside links to precedents, as well as guidance on court approval. It also addresses varying, setting aside and enforcing a Tomlin order, including the considerations the court will take into account when handling applications for each. Further guidance is provided on interpreting and applying the relevant provisions of the CPR; however, some courts and divisions impose very specific requirements for both drafting and approval, and for approaching the schedule and confidentiality issues. Accordingly, you must consider the particular rules and court guide provisions in the forum where your claim is proceeding when drawing up the Tomlin order...

Precedent: Deed of Surrender of Lease with Optional Premium, Settlement and Release, Landlord, Mortgagee and Guarantor Consents, Reimbursement and HM Land Registry Provisions (England and Wales)

Date [ date ] Parties [ name of Landlord ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Landlord) [ name of Tenant ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Tenant) [ [ name of Guarantor ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Guarantor) ] [ [ name of Mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Mortgagee) ] Definitions Within this Deed, the terms below shall be interpreted as follows: [ Annual Rent • the annual sum reserved under the Lease; ] [ Insurance Rent • the Tenant’s share of the Landlord’s costs of insuring the Property (as set out in the Lease); ] Lease • the lease of the Property dated [ date ], entered into between (1) [ the Landlord OR [ name ...

Precedent Statutory Declaration: Standard Wording under the Statutory Declarations Act 1835

I, [ name ], of [ address ], solemnly and sincerely state that: [ Matters to be verified, set out in numbered paragraphs ] I make this solemn statement in good conscience, believing it to be true, and pursuant to the provisions of the Statutory Declarations Act 1835. DECLARED at [ details ] this [ day ] day of [ month and year ] Before me ................................................................................ [ signature of the person before whom the declaration is made ] A [ commissioner for oaths OR [ solicitor OR [ insert other qualification ] ] authorised to administer oaths ]...