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...

UK offshore upstream oil and gas insolvency and restructuring: a legal practitioner's guide to OGA licensing and consents, JOAs, decommissioning liabilities, cross-border issues, and officeholder options

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

Introduction to common participants in the market

The oil and gas sector is a major contributor to the UK economy:

It supports around 152,000 jobs, both directly and indirectly
It accounted for 0.8% of GDP in Q2 2015, down from a peak of 2.5% in Q2 2008
Government revenues from production in 2016/2017 were £1.2bn
The UK is Europe’s second largest oil producer and the third largest gas producer

Historically, the industry has been buoyant, with limited involvement from insolvency practitioners. In 2010, there were only four insolvencies in the sector. However, when oil prices fell to a record low in 2015, the number of insolvencies increased to 28 that year.

Due to its maturity, the UK continental shelf is among the more expensive regions globally for oil production: before the 2015/2016 downturn, producing a barrel in the UK cost about US$40, compared with under US$5 in Kuwait. These costs have somewhat reduced since the 2015/2016 downturn...

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Web page updated on 22/05/2026

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