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...

LGPS liabilities on academy and college insolvency and restructuring: exit debts, TUPE admission agreements, guarantees, DfE guarantee and the education administration regime (England and Wales)

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

What is the Local Government Pension Scheme?

The principal pension arrangement for local authorities is the Local Government Pension Scheme (LGPS). As a statutory, public service scheme, it covers local government and related staff across England and Wales, with distinct schemes operating in Scotland and Northern Ireland. For a general overview, see: Local government pensions—overview.

Bodies joining the LGPS—whether admission, scheduled or designated—take on significant duties and potential risks. Guidance on which employers can participate is set out in Practice Note: The Local Government Pension Scheme—admission agreements. A core responsibility is meeting the cost of benefits, a commitment that most participating employers expect and plan for. Less widely appreciated is the exposure that arises when certain LGPS employers fail because of Insolvency or undergo employer restructuring. This issue has drawn particular focus in the education sector following funding reductions. This Practice Note considers the LGPS implications that arise where an employer of this kind becomes insolvent or restructures...

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Web page updated on 21/05/2026

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