Jurisdiction(s):
United Kingdom

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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...

Establishment proceedings in cross-border insolvency: definition

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Q&As

Establishment proceedings

This Q&A looks at the meaning of ‘establishment proceedings’, a concept introduced by the insolvency (Amendment) (EU Exit) Regulations 2019 (brexit SI 2019/146), SI 2019/146. The term is newly inserted into the Insolvency (England and Wales) rules 2016 (IR 2016), SI 2016/1024 by Brexit SI 2019/146 (see IR 2016, SI 2016/1024, r 1.2(2)). It does not feature in: (i) the EU recast regulation on Insolvency, nor (ii) the Retained Recast Regulation on Insolvency, but broadly appears to take the place of ‘secondary proceedings’ used in the EU Recast Regulation on Insolvency.

Brexit SI 2019/146 inserts the following into IR 2016:

‘establishment proceedings’ means insolvency proceedings in England and Wales to which the EU Regulation applies where the centre of the debtor has an establishment in the United Kingdom.

‘Establishment’ was not previously defined in IR 2016, r 1.2, but Brexit SI 2019/146 adds:

‘establishment’ has the same meaning as in Article 2(10) of the EU Regulation.

The definition of ‘EU Regulation’ in IR 2016, SI 2016/1024, r 1.2 remains unchanged by Brexit SI 2019/146...

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Web page updated on 11/06/2026

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