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...

Insolvency investigations and litigation without estate assets: funding methods, cost protection and assignments for insolvency practitioners (England and Wales)

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

This Practice Note covers:

funding issues facing Insolvency practitioners
the development of litigation funding
which costs different funding routes meet
general options for funding litigation
insolvency-specific funding solutions
key points for IPs when using litigation funding
exposure to an opponent’s costs

Funding concerns for insolvency practitioners

Insolvency practitioners (IPs) must maximise returns for creditors of an insolvent entity, and current or potential claims can be crucial assets of the Estate. IPs are obliged to manage the estate’s claims, or at least decide whether prospective actions should be pursued. Yet inquiries and proceedings are costly and outcomes are uncertain. Planning should address:

the IP’s legal fees (solicitors and counsel)
disbursements, including court fees and expert reports
the probable need to provide security for costs

Under CPR 25, defendants are likely to seek security for costs against an IP at an early stage, because they may fear that the claimant lacks the resources to meet their costs if the defendant succeeds...

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Mark Sands

Opus Business Advisory Group

Mark has nearly 40 years of experience in the insolvency profession, with more than 15 years as an appointment taking insolvency practitioner. Mark’s focus for the last 20 years has been on personal and contentious insolvency cases, with several years spent at a litigation funder reviewing insolvency claims for funding. Mark worked on several reported personal insolvency cases, which still influence insolvency practice today. Mark’s last few roles have had a national footprint as a result of which Mark is as well known in the regional centres as in London. At Opus Mark is leading and developing their personal insolvency offering....

Web page updated on 21/05/2026

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