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An
administration order is a court order placing
a company that is, or is likely to become,
insolvent under the control of an administrator
following a petition by the company, its
directors or a creditor. The purpose of
the order is to preserve the company's business
and assets to allow a reorganisation or
ensure the most advantageous realisation
of its assets whilst protecting it from
action by its creditors.
The
administration of the insolvent estate of
a deceased debtor.
County
court process permitting an individual with
modest debts to pay off installments. No
insolvency practitioner is involved.
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The
person (usually an accountant or solicitor)
authorised by the Department of Trade and
Industry (DTI) or a professional body to
act as trustee, nominee, supervisor, liquidator,
administrative receiver or administrator.
Only such a person can hold any of these
offices.
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The
person appointed by the holder of a floating
charge debenture over a company's assets
to collect in and realise the assets of
that company and to repay the indebtedness
to the debenture holder.
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The
term applied when an insolvency practitioner
is appointed as an administrative receiver.
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The
insolvency practitioner appointed by the
court to handle the affairs of a company
the subject of an administration order.
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A
special remedy to take control of the assets
of a farmer under the Agricultural Credits
Act 1928.
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Associates
of individuals include family members, relatives,
partners and their relatives, employees,
employers, trustees in certain trust relationships,
and companies which the individual controls.
Associates of companies include other companies
under common control.
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Someone
against whom a bankruptcy order has been
made and who has not been discharged from
bankruptcy.
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The
court order making an individual bankrupt
(this replaces the concept of the receiving
order and adjudication of bankruptcy in
the old Act cases).
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Insurance
cover needed by a person who acts as an
insolvency practitioner.
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The
appropriation of real or personal property
for the discharge of a debt without giving
the creditor any property in, or possession
of, the subject of security.
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Court
order placing restrictions on the disposal
of certain assets, such as property or securities,
given after judgement and gives priority
of payment over other creditors.
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Consolidation
Act on the disqualification of directors.
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A
voluntary agreement for a company is a procedure
whereby a plan of reorganisation or composition
in satisfaction of debts, is put forward
to creditors and shareholders. There is
limited involvement by the court and the
scheme is under the control of a supervisor.
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An
agreement between debtor and his creditors
whereby the compounding creditors agree
with the debtor between themselves to accept
from the debtor payment of less than the
amounts due to them in full satisfaction
of their claim.
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The
placing of a company into liquidation as
a result of an application to the court,
usually by a creditor.
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Directors
or shadow directors and their associates,
and associates of the company.
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Shareholder,
every person liable to contribute to the
assets of a company in the event of it being
wound up.
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A
person, not necessarily a licensed insolvency
practitioner, appointed to take charge of
assets usually where they are subject to
some legal dispute. Not strictly an insolvency
process, the procedure may be used other
than for a limited company, e.g. to settle
a partnership dispute.
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A
creditors' committee is formed to represent
the interests of all creditors in supervising
the activities of an administrator or trustee
in bankruptcy, or receiving reports from
an administrative receiver.
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Relates
to an insolvent company. It is commenced
by resolution of the shareholders, but is
under the effective control of creditors,
who can choose the liquidator, liquidation
committee.
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A
document stating the terms of a loan, usually
to a company. Debentures may be secured
on part or all of a company's assets, or
they may be unsecured. Often also referred
to as a floating charge, and the lender
is often referred to as the debenture holder.
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Method
for an individual (not a company) to come
to terms with creditors short of formal
bankruptcy, it has now been almost completely
replaced by Individual Voluntary Arrangements.
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A
director found to have conducted the affairs
of an insolvent company in an "unfit" manner
may be disqualified, on application to the
court by the DTI, from holding any management
position in a company for between 2 and
15 years.
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An
extortionate credit transaction is a transaction
by which credit is provided on terms that
are exorbitant or grossly unfair compared
with the risk accepted by the creditor.
Such a transaction may be challenged by
an administrator, a liquidator or a trustee
in bankruptcy.
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A
fixed charge is a form of security granted
over specific assets, preventing the debtor
dealing with those assets without the consent
of the secured creditor. It gives the secured
creditor a first claim on the proceeds of
sale, and the creditor can usually appoint
a receiver to realise the assets in the
event of default.
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A
floating charge is a form of security granted
to a creditor over general assets of a company
which may change from time to time in the
normal course of business (e.g. stock).
The company can continue to use the assets
in its business until an event of default
occurs and the charge crystallises. If this
happens, the secured creditor can realise
the assets to recover his debt, usually
by appointing an administrative receiver,
and obtain the net proceeds of sale subject
to the prior claims of the preferential
creditors (e.g. Customs & Excise or
Inland Revenue).
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Where
a company has carried on business with intent
to defraud creditors, or for any fraudulent
purpose. It is a criminal offence and those
involved can be made personally liable for
the company's liabilities.
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Basis
on which insolvency practitioners prefer
to sell a business. Effectively it means
the business continues, jobs are saved,
and a higher price is obtained.
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A
legal commitment to repay a debt if the
original borrower fails to do so. Directors
may give guarantees to banks in return for
the bank giving finance to their companies.
Companies in a group may guarantee each
others loans.
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A
voluntary arrangement for an individual
is a procedure whereby the person comes
to an arrangement with his creditors in
how their debt will be discharged. Such
a scheme requires the approval of the court
and is under the control of a supervisor.
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The
state of not being able to pay one's debts
as they fall due or having an excess of
liabilities over assets.
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Primary
legislation governing insolvency law and
practice. Nevertheless, many other statues
and statutory instruments are also relevant.
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A
company goes into insolvent liquidation
if it goes into liquidation at a time when
assets are insufficient for the payment
of its debts and other liabilities and the
expenses of liquidation.
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Person
authorised by one of the chartered accountancy
bodies, the Law Societies, The Insolvency
Practitioners Association or the Department
of Trade. The only person who may act as
office holder in an insolvency proceeding.
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The
Insolvency Rules 1986, as amended, provide
the detailed working procedures for the
provisions of the Insolvency Act 1986.
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The
Insolvency Rules 1986 (as amended) these
Rules apply where the Act applies. Where
the old Act continue to apply so do the
Bankruptcy Rules 1952 and the Companies
(Winding Up) Rules 1949. There are separate
rules dealing with insolvent partnerships,
insolvent deceased's estates and deeds of
arrangement.
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An
individual who intends to propose a voluntary
arrangement to his creditors may apply to
the court for an interim order which, if
granted, precludes bankruptcy and other
legal proceedings whilst the order is in
force.
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A
statutory scheme operated by the SIB (Securities
and Investments Board) to give individual
investors up to £48,000 protection if an
authorised investment business collapses.
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1.
Recognition of a debt by a court.
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2.
Decision given by a court at the conclusion
of a trial.
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Governs
transactions in law and property. Contains
statutory powers of receivers appointed
under a fixed charge.
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Law
of Property Act 1925 receiver: a person
(not necessarily an insolvency practitioner)
appointed to take charge of a mortgaged
property by a lender whose loan is in default,
usually with a view to sale or to collect
rental income for the lender. Common in
the case of failure of a property developer,
whose borrowings will largely be secured
on specific properties.
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Right
to retain possession of assets or documents
until settlement of a debt.
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The
procedure whereby the assets of a company
(or partnership) are gathered in and realised,
the liabilities met and surplus, if any,
distributed to members.
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Committee
of creditors who receive information from
the liquidator and sanction some of his
actions.
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The
person appointed to deal with the assets
and liabilities of the company or partnership
once the resolution to wind up has been
passed or a compulsory winding up order
has been made.
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Court
order preventing the disposal of assets.
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Shareholder
of a company.
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A
solvent liquidation where the shareholders
appoint the liquidator to realise assets
and settle all the company's debts in full
within 12 months.
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Breach
of duty in relation to the funds or property
of a company by its directors or managers.
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A
transfer of an interest in land or other
property by way of security, redeemable
upon performing the condition of paying
a given sum of money.
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The
person chosen by the individual or corporate
debtor to report on the debtor's proposals
for an IVA or CVA.
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A
person who is required to be a qualified
insolvency practitioner to hold the following
posts, of a liquidator, provisional liquidator,
administrator , administrative receiver,
supervisor of a voluntary arrangement, or
trustee in bankruptcy.
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The
civil servant employed by the DTI to head
the regional offices whose responsibilities
cover bankruptcies and compulsory liquidations.
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The
term onerous property in the context of
a liquidation or bankruptcy, applies to
unprofitable contracts and to property that
is unsaleable or not easily saleable or
that might give rise to a continuing liability.
Such property can be disclaimed by a liquidator
or a trustee in bankruptcy.
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A
written application to the court for relief
or remedy.
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An
act which established Policyholders Protection
Board to provide compensation to the public
in the event of the liquidation of an insurance
company. The Board will make payment in
full of liabilities under certain policies
of compulsory insurance and 90 per cent
of liability to provide policyholders under
other general and investment type policies.
Compensation is restricted to individual
policyholders or partnerships; corporate
policyholders are not protected.
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A
payment or other transaction in the six
month to two year period preceding a liquidation,
administration or bankruptcy, which places
a creditor or a person connected with the
insolvent, respectively, in a better position
than they would have been otherwise. A liquidator,
administrator or trustee in bankruptcy may
recover any sums which are found to be preferences.
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Defined
in Schedule 6 of The Insolvency Act 1986.
Has priority when funds are distributed
by a liquidator, administrative receiver
or trustee in bankruptcy.
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The
document submitted in an insolvency to establish
a creditor's claim. It may be informal (by
e.g. letter) or in a prescribed form (in
bankruptcy and compulsory liquidations).
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A
creditor who claims is referred to as "proving"
for his debt, and the document by which
he seeks to establish his claim is his "proof".
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The
person appointed by the court to deal with
the affairs of the company until a compulsory
winding up order.
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The
authority given by a creditor or member
to another person (proxy holder) to attend
a meeting and speak and vote at a meeting
on behalf of the creditor (principal) or
member.
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A
person who is authorised to attend a meeting
on behalf of someone else.
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The
person appointed by the court for some specific
purpose or the person appointed by a mortgage
to exercise his rights over the charges
property under the Law of Property Act 1925
(not to be confused with the Official Receiver
or Administrative Receiver.
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The
general term applied when a person is a
appointed as a receiver or administrative
receiver over certain assets.
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An
organisation approved by the Secretary of
State as being able to authorise its members
to act as insolvency practitioners.
A body may be recognised if it regulates
the practice of a profession and maintains
and enforces rules for securing that such
of its members as are permitted by or under
the rules to act as insolvency practitioners-
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(a)
are fit and proper persons so to act, and
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(b)
meet acceptable requirements as to education
and practical training and experience.
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An
agreement for the sale of goods to a company,
being an agreement;
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(a)
which does not constitute a charge on the
goods, but
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(b)
under which, if the seller is not paid and
the company is wound up, the seller will
have priority over all other creditors of
the company in respect to the goods or any
property representing the goods.
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A
creditor with specific rights over some
or all his debtor's assets in the event
of insolvency. In essence he is paid first
from the secured assets.
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A
charge or mortgage over assets taken to
secure payment of a debt. If the debt is
not paid, the lender has a right to sell
the charged assets. Security documents can
be very complex. The commonest example is
a mortgage over a property.
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A
person who is not formally appointed as
a director, but in accordance with whose
directions or instructions the directors
of a company are accustomed to act. However,
a person is not a shadow director merely
because the directors act on advice given
by him in a professional capacity.
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A
special manager is a person appointed by
the Court in a compulsory liquidation or
bankruptcy to assist the liquidator, official
receiver or trustee in managing the insolvent's
business. He does not need to be an insolvency
practitioner.
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A
formal notice requiring payment of a debt
exceeding £750 within 21 days, in default
of which bankruptcy or liquidation proceedings
may be commenced without further notice.
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The
person appointed to supervise the implementation
of the debtor's proposals for an IVA or
CVA once approved by creditors (and members).
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A
transaction at an undervalue can describe
either a gift or a transaction in which
the consideration received is significantly
less than that given. In certain circumstances
such a transaction can be challenged by
an administrator, a liquidator or a trustee
in bankruptcy.
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either
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in
bankruptcy - the authorised insolvency practitioner
appointed to deal with the estate of the
bankrupt;
or
under a deed of arrangement - the authorised
insolvency practitioner appointed to deal
with the estate of the person who entered
into the deed.
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Strictly,
any creditor who does not hold security.
More commonly used to refer to any ordinary
creditor who has no preferential rights,
although, in fact preferential creditors
will almost always also be unsecured. In
any event, the last in the queue, ahead
only of the shareholders.
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Someone
against whom a bankruptcy order has been
made and who has not been discharged from
bankruptcy.
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The
relief obtained in respect of the VAT element
of an unpaid debt. Previously available
only when the debtor became insolvent, relief
is now available on any debt unpaid for
more than 6 months.
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The
placing of the company into liquidation
by resolution of the members - there are
two types of voluntary liquidation
member's voluntary liquidation; and creditor's
voluntary liquidation.
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The
first of these does not involve insolvency
and comes about merely because the (shareholders)
members wish to have the value of their
shareholding realised e.g. on the retirement
of the principals of the company was incorporated
has been fulfilled.
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(Or
liquidation) - the procedure whereby the
assets of a company (or partnership) are
gathered in and realised, the liabilities
met and the surplus, if any, distributed
to members.
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The
order made by the court for a company to
be placed in compulsory liquidation.
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A
winding-up petition is a petition presented
to the court seeking an order that a company
be put into compulsory liquidation.
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Applied
to companies in liquidation where a director
allowed the company to continue trading
in circumstances where he should have concluded
that there was no reasonable prospect that
the company would avoid going into solvent
liquidation. The directors involved may
be made personally liable to make a contribution
to the company's assets.
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