A method of rescuing a company or disposing of its business and/or assets with protection from creditors.

Administrative receiver

An insolvency practitioner appointed by the holder of a floating charge entered into before 15 September 2003 (although there are exceptions to this cut off date), covering the whole, or substantially the whole, of a company’s property. Appointed to recover sums due to the secured lender.


The insolvency practitioner in office during an administration.

Asset freezing order

Order preventing the disposal of assets by a defendant pending the resolution of legal proceedings.

Bailiff – certificated

A person authorised by the county court to act privately for landlords and certain public bodies in the seizure of goods for unpaid rent, rates and taxes.

Bailiff – county court

An officer of the county court who acts in the execution of warrants and seizure of goods on judgment debts of the county court. See also: sheriff’s officer.


An individual is declared bankrupt by the court either at their own request or as a result of action taken by a creditor. A trustee in bankruptcy will be appointed to realise the bankrupt’s assets.


Fidelity insurance for an insolvency practitioner.

Charging order

Court order granting security over the freehold or leasehold property of a debtor which may be made after judgment.

Chattel mortgage

fixed charge granted over a moveable asset.

Committee of creditors

Three to five creditors, appointed to assist the insolvency practitioner.

Company Directors’ Disqualification Act 1986

This Act sets out the circumstances in which a person can be disqualified from acting as a company director.

Company search

A request to the registrar of companies to provide information from a company’s public file.

Compulsory liquidation

See: Liquidation

Company voluntary arrangement (CVA)

A formal, legally binding agreement between a company and its creditors in satisfaction of its liabilities. (See also: voluntary arrangement).

Companies’ Act 1985

The Act that provides the framework of current company law.


Court orders for the confiscation of assets representing the proceeds of crime.

Connected person

Someone closely related to the insolvent company, including directors, the directors’ family members and subsidiary or associated companies.


Any person, business or organisation to whom the debtor owes money.

Creditors’ voluntary liquidation

See: Liquidation

Crown set-off

The right of separate government departments to be treated as a single entity for the purpose of setting off amounts due to and from an insolvent company or individual.


A document, issued by a company, normally granting security in exchange for borrowings.


Any person who owes money to another.

Declaration of solvency

director’s sworn statement of assets and liabilities required prior to a members’ voluntary liquidation to confirm that the company is solvent.


Anyone who holds the office of director, or acts in the management of a company as though a director, irrespective of title.

Discharge of bankrupt

When an individual is discharged from bankruptcy, they are released from liability in respect of pre-bankruptcy debts.


A company is dissolved when removed from the companies’ register.


Seizure of goods for non-payment of rent, rates or taxes.


Same as distraint.


A distribution to creditors by an insolvency practitioner

Employment Rights Act 1996 (‘ERA’)

This Act includes provisions for the Department of Trade and Industry to pay certain claims of employees in an insolvency.

Enterprise Act 2002

An Act that revises the Insolvency Act 1986 in respect of the company administration procedure with effect from 15 September 2003 and personal bankruptcy with effect from 1 April 2004.


The seizure and sale of goods to satisfy a judgement debt.

Fixed charge

Security granted by an individual or company charging a particular asset in exchange for borrowing. The borrower’s power to deal with the asset concerned is restricted. See also: chattel mortgage.

Floating charge

Security granted by a company charging general assets in exchange for borrowing. The borrower may continue to deal with the assets in the ordinary course of business.

Fraudulent trading

Running a company with intent to defraud creditors.

Garnishee order

Where A owes B, B owes C and C obtains a judgement against B, C may apply for a garnishee order for A to pay C direct, by-passing B.

Going concern / going concern value

An operational business / the value of an operational business as distinct from the sum of the values of its individual assets.

Hiatus period

The interval between the directors‘ decision to prepare for creditors’ voluntary liquidation and the passing of the shareholders’ resolution formally placing the company into .

Holder of a qualifying floating charge

A charge holder with security rights covering the whole or substantially the whole of a company’s property and including a qualifying floating charge.

Individual voluntary arrangement (IVA)

A formal, legally binding agreement between an individual and their creditors in satisfaction of their liabilities. (See also:voluntary arrangement).

Insolvency Act 1986

The Act which provides the framework of current insolvency law.

Insolvency practitioner

A person licensed to accept appointment as office holder in a formal insolvency.

Insolvency Rules 1986

These provide the detailed working procedure of the Insolvency Act 1986.

Interim order

A court order freezing creditors‘ rights prior to the approval of an individual voluntary arrangement.

Law of Property Act 1925

This Act includes statutory powers and duties of a receiver appointed under a mortgage.


A right to retain possession of assets or documents until the settlement of a debt.


The process of realising a company’s assets and distributing the proceeds to creditors. Can include:

  • Members’ voluntary liquidation – this applies where the directors declare that the company is solvent, so that the creditorswill be paid in full.
  • Creditors’ voluntary liquidation – this applies where the directors consider that the company is insolvent. The shareholders appoint a liquidator who has to be confirmed in office by the creditors.
  • Compulsory liquidation – this applies where a creditor has petitioned the court for the winding-up of the company. The official receiver becomes liquidator, but may be replaced by an insolvency practitioner.

Liquidation committee

See: Committee of creditors


The insolvency practitioner who holds office in any type of Liquidation. The official receiver may only be liquidator in acompulsory liquidation.

LPA receiver

A shorthand term for a receiver of a property, or of a specified category of property, not being an administrative receiver; in practice appointed under the terms of a mortgage or charge document and not under the terms of the Law of Property Act 1925.

Members’ voluntary liquidation

See: Liquidation.


Breach of duty in relation to the funds or property of a company by its directors.


Security taken over land for the payment of a debt.


A lender to whom a mortgage is granted.


A borrower who mortgage their property.


An insolvency practitioner appointed to report on the proposal of a company or individual prior to a voluntary arrangement.

Official receiver

A civil servant employed by the Department of Trade and Industry who is responsible for many aspects of bankruptcy andcompulsory liquidation.


A type of application to court.


A payment or other transaction intended to favour one creditor. A liquidatoradministrator or trustee in bankruptcy may recover any sums which are preferences.

Preferential creditors

Certain claims from employees rank ahead of floating charge holders and the unsecured creditors. The principal categories are:

  • Wages: 4 months prior to insolvency – limited to £800 per employee
  • Holiday pay: no limits
  • Pension contributions: 4 months prior to insolvency (employee contributions), 12 months prior to insolvency (employer contributions to contracted out schemes).

Proof of debt

A document submitted by a creditor to the insolvency practitioner giving evidence in support of the amount claimed.

Provisional liquidator

An insolvency practitioner (or official receiver) appointed to safeguard a company’s assets after presentation of a petitionedfor a compulsory liquidation.

Proxy form

A document enabling a person to vote on behalf of a company, partnership or individual at a meeting.

Qualifying floating charge

floating charge which purports to empower the holder to appoint an administrator or administrative receiver.


A person appointed to take possession of assets either with a power of sale or in a protective capacity. See also: administrative receiver.


The control of assets or an enterprise by a receiver, either to realise a charge holder’s security or for protection from dissipation.

Reservation of title

A contractual term meaning that ownership of goods sold does not pass to the customer until the supplier has been paid.


A colloquial term for reservation of title, derived from an important Court of Appeal case, Aluminium Industrie Vaassen BV v Romalpa Aluminium Limited (1975).

Scheme of arrangement

A compromise or arrangement made under the authority of the Companies Act 1985 between a company and its creditors or members.

Secured lenders

Lenders who have the benefit of mortgages, or fixed or floating charges over the assets of a borrower.


A granting of rights over assets by a borrower to protect a lender.


Where A owes B and B owes A and B is insolvent, only the net balance may be paid or claimed, in certain circumstances.

Shadow director

A person in accordance with whose directions or instructions the directors of a company are accustomed to act.


An officer in each county, entrusted with the administration of the law. This is a ceremonial appointment. See also: sheriff’s officer and under sheriff.

Sheriff’s officer

A person appointed by the sheriff who acts in the execution of writs and seizure of goods on judgment debts of the High Court. See also: Bailiff – county court.

Special manager

A person appointed by the court in compulsory liquidation or bankruptcy proceedings to manage the enterprise.

Statement of affairs

A sworn statement of the assets and liabilities of an insolvent company or individual.

Statutory demand

A formal demand for payment of a debt, which can be used as the basis of a petition for the winding-up or bankruptcy of thedebtor if not met.


Assuming the rights of a creditor following payment of that creditor’s claim.


The insolvency practitioner who implements a voluntary arrangement.

Transaction at undervalue

A disposal of assets for significantly less than their value. A liquidatoradministrator or trustee in bankruptcy may recover the assets or obtain compensation.

Trustee in bankruptcy

The insolvency practitioner or official receiver who holds office in bankruptcy.

Under sheriff

A person appointed by the sheriff, generally a solicitor, to take practical responsibility for the administration of the law in the county.

Undischarged bankrupt

A person who has been made bankrupt and has not yet received discharge. See also: discharge of bankrupt.

Voluntary arrangement

A binding arrangement, supervised by an insolvency practitioner, between an insolvent company, partnership or individual and their creditors (see also company voluntary arrangement and individual voluntary arrangement).

Voluntary liquidation

See: Liquidation

Walking possession

An agreement with a creditor that goods seized by them under an execution or distraint remain in the possession of the debtorand are not removed, giving the debtor further time to pay.


See: Liquidation

Winding-up order

Court order for the compulsory liquidation of a company.

Wrongful trading

A civil action can be brought by a liquidator for the company’s directors to pay compensation where they had not minimised the loss to creditors after insolvent liquidation had become inevitable.