Administration order
An order from a county court to arrange and administer the payment of debts by an individual, or for a company which appoints an administrator to take control of the company.
A company can also be put into administration if a floating charge holder, or the company directors, file the requisite notice at court.
Administrative receiver
An IP appointed by a debenture holder secured by a floating charge which covers all, or most of, the company’s assets.
The IP’s task is to realise those assets on behalf of the debenture holder.
Administrative receivership
This occurs when an insolvency practitioner is appointed by a debenture holder (lender) to realise a company’s assets and pay preferential creditors and the debenture holder’s debt.
The right of a debenture holder to appoint an administrative receiver is restricted by the Enterprise Act 2002.
Administrator
An IP appointed by the court under an administration order, or by a floating charge holder, or by the company, or its directors filing the requisite notice at court.
Annulment
Assets
Any items of value which belong to the debtor and can be used to pay their debts.
Bankruptcy restrictions order or undertaking
A procedure whereby a dishonest bankrupt responsible for their bankruptcy may have a court order made against them, or give an undertaking to the Secretary of State.
Bankruptcy restrictions continue to apply after discharge for a period of 2-15 years.
Charge
Security interest taken over property by a creditor to protect against non-payment of a debt (such as a mortgage).
Company Directors Disqualification Act 1986
An Act of Parliament related to the disqualification of directors.
Compulsory liquidation
Occurs when a company is wound up after a petition to the court, usually by a creditor.
Contributory
Every person liable to contribute to a company’s assets if it’s wound up.
In most cases, this means shareholders who haven’t paid for their shares in full.
Creditor
An individual owed money by a bankrupt or company.
Debenture
A written document, usually under seal, issued as evidence of a debt or the granting of security for a loan of a fixed sum at interest (or both).
The term is often used in relation to loans (usually from banks) secured by charges, including floating charges, over companies’ assets.
Director
A person who conducts the affairs of a company.
Disqualification
A procedure whereby a person has a court order made against them or gives an undertaking to the Secretary of State, which makes it an offence for that person to be involved in the management or directorship of a company for a specified time period (unless leave has been granted by the court).
Dividend
Any sum distributed to unsecured creditors in the event of an insolvency.
Fixed charge
A charge held over specific assets. The debtor cannot sell the assets without the consent of the secured creditor, or repaying the amount secured by the charge.
Floating charge
A charge held over general assets of a company.
These assets may change (such as stock) and the company can use them without the consent of the secured creditor, until the charge “crystallises” (becomes fixed).
Crystallisation occurs when an administrative receiver is appointed, on the presentation of a winding-up petition, or as otherwise provided for in the document creating the charge.
Guarantee
An agreement to pay a debt owed by a third party. To be enforceable, it must be witnessed in writing.
Liquidation (winding up)
Usually applies to companies or partnerships, and involves the realisation and distribution of assets, and usually the closing down of the business.
There are three types of liquidation:
- Compulsory,
- Creditors’ Voluntary and
- Members’ Voluntary
Liquidator
The Official Receiver or an insolvency practitioner appointed to administer the liquidation of a company or partnership.
Member (of a company)
A person who is registered as a member, for example, as a shareholder of a limited company.
Nominee
An IP who carries out the preparatory work for a voluntary arrangement, before its implementation.
Officer (of a company)
A director, manager or secretary of a company.
Official Receiver
An officer of the court and civil servant employed by The Insolvency Service, who deals with bankruptcies and compulsory company liquidations.
Petition
A formal application made to a court.
Preferential creditor
A creditor entitled to receive certain payments in priority to floating charge holders and other unsecured creditors.
These creditors include occupational pension schemes and employees.
Proof of debt
A statutory form supplied by the Liquidator, and completed by a creditor in a compulsory liquidation to state how much is claimed.
Provisional liquidator
An OR/IP appointed to preserve a company’s assets, pending the hearing of a winding up petition.
Proxy
Instead of attending a meeting, a person can appoint someone to go and vote in their place – a ‘proxy’.
Proxy form
A form which must be completed if a creditor wishes someone else to represent them at a creditors’ meeting, and vote on their behalf.
Public examination
When a company is being wound up or in bankruptcy proceedings, the Official Receiver can apply to the court to question the company’s director(s), or any other person who has taken part in the promotion, formation or management of the company or the bankrupt.
Realise
The sale or disposal of an asset to raise money, for example, to sell an insolvent’s assets and obtain the proceeds.
Receiver
The usual name for an administrative receiver.
It can also mean a person appointed by the court, or someone with the power to receive the rents and profits of property.
Receivers who aren’t administrative receivers don’t need to be insolvency practitioners.
Receivership
A company in administrative receivership is often said to be “in receivership”.
Rescission
A procedure that cancels a winding-up order.
Release
The process by which the Official Receiver or insolvency practitioner is discharged from the liabilities of office as trustee/liquidator or administrator.
Secretary of State
The Secretary of State for the Department for Business, Innovation & Skills Secured creditor.
A creditor who holds security, such as a mortgage, over a person’s assets for money owed.
Shadow director
A person who, without being formally appointed, gives instructions which the directors of a company act upon.
Statement of affairs
A document sworn under oath, and completed by a bankrupt, company officer or director(s), which provides details of the company’s assets, as well as details of debts and creditors.
Supervisor
An IP appointed to supervise the carrying out of a company voluntary arrangement.
Unsecured creditor
A creditor who doesn’t hold any security (such as a mortgage) for money owed.
Some unsecured creditors may also be preferential creditors.
Voluntary liquidation
This liquidation method doesn’t involve either the courts or the Official Receiver.
There are 2 types of voluntary liquidation:
- Members’ voluntary liquidation for solvent companies, and
- Creditors’ voluntary liquidation for insolvent companies.
Winding up order
A court order, usually based on a creditor’s petition, for the compulsory winding up or liquidation of a company or partnership.
