Administration order
An order made by the Court in response to a petition by the company, its directors or one or more creditors. Usually used as a method of rescuing the business or finding a buyer as a going concern. The Administration process can also be used to protect the company's position while a Company Voluntary Arrangement is formulated and approved
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Administrative receiver (In Scotland - a receiver)
A receiver or manager of the whole, or substantially the whole, of a company's property, appointed by the holder of a floating charge. The administrative receiver's duty is primarily to recover sums due to the holder of the floating charge. Must be an insolvency practitioner.
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Administrator
The person appointed as such by the Administration Order. Must be an insolvency practitioner.
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Agricultural charge (England and Wales only)
A security (a mortgage or charge) under the Agricultural Credits Act 1928 (England and Wales only) charging farming assets owned by an individual or partnership, in exchange for borrowing.
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Bailiffs
Generally officers of the Court who enforce judgment debts by levying execution and seizing goods. (See also: Sheriff's officer). Private bailiffs are authorised by the Court to act for landlords and others (local authorities, Inland Revenue) to levy execution for unpaid rent, rates and taxes.
Levying execution means seizing and selling the debtor's goods.
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Bankruptcy
The process whereby an individual is declared bankrupt by the court either as a result of their own or a creditor's petition. Either the Official Receiver (an officer of the Insolvency Service) or an insolvency practitioner will be appointed trustee in bankruptcy to realise the debtor's (bankrupt's) assets.
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Charging order
A Court order granting a charge over the debtor's freehold or leasehold property which may be made after judgment or bankruptcy.
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Chattel mortgage
A fixed charge over a moveable asset.
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Committee of creditors
A committee, usually appointed by the creditors at their first meeting, to assist the insolvency practitioner.
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Company Directors' Disqualification Act 1986 (Companies (Northern Ireland) Order 1989)
The legislation which provides for a person to be disqualified from acting as a company director.
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Company search
Information provided by the Registrar of Companies from a company's public file.
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Compulsory liquidation
A liquidation initiated by a Winding up Petition and a Winding up Order
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Company voluntary arrangement (CVA)
An agreement proposed by a company to its creditors which, once properly accepted by the appropriate majority, is binding on all creditors. A CVA usually provides for creditors to accept either a delay in payment, a reduction of their debt or a combination
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Companies' Act 1985
The principal current company law legislation
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Connected person
Someone closely related to the insolvent company or individual, including directors, the directors' family members and subsidiary or associated companies.
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Creditor
Any person, partnership, company, business or other organisation to whom a debtor owes money.
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Creditors' voluntary liquidation
A liquidation initiated by the directors and shareholders of a company which is insolvent (in other words cannot pay all its debts in full). Because there will be no money available to the shareholders, who come after the creditors in the statutory order of payment, it is a creditors liquidation because they have the main interest.
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Crown set-off
Government departments are entitled to set off amounts due to and from an insolvent company or individual, as between themselves.
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Debenture
A document constituting a charge over the assets of a company, usually given as security for a loan or overdraft.
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Debtor
A person, partnership or company who owes money to another.
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Declaration of solvency
A declaration by some or all of a company's directors that it can pay all its debts in full within one year.
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Director
Any person occupying the position of director, by whatever name.
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Discharge (bankruptcy)
The discharge, normally granted after either two or three years, releases the debtor from the bankruptcy debts.
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Dissolution
The final demise of a company when it is removed from the Companies Register at Companies House
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Distraint or Distress(England and Wales only)
Seizure of goods for non-payment of rent, rates or taxes.
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Dividend
A payment to creditors being their share of the amounts realised in an insolvency procedure, after costs.
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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. In Northern Ireland, these provisions are contained in the Employment Rights (Northern Ireland) Order 1996.
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Enterprise Act 2002
An Act that revises the Insolvency Act 1986 in respect of the company administration procedure and personal bankruptcy.
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Execution (England and Wales only)
The seizure and sale of goods to satisfy a judgment debt.
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Fixed charge
A charge (frequently a mortgage) created by an individual or company over a specific asset. The borrower has restricted powers to deal with the particular asset without the consent of the chargeholder.
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Floating charge
A security charging variable assets (such as stock, or plant and machinery). The borrower is able continue to deal with the assets in the ordinary course of business without any specific reference to the lender.
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Fraudulent trading
Trading a company with the real and active intention of defrauding creditors.
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Garnishee order (England and Wales only)
Court order to a bank for it to pay a creditor of its customer direct.
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Going concern
A business which is operating effectively as normal with no threat of insolvency.
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Individual voluntary arrangement (IVA)
An agreement proposed by an individual to his or her creditors which, once properly accepted by the appropriate majority, is binding on all creditors. An IVA usually provides for creditors to accept either a delay in payment, a reduction of their debt or a combination.
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Insolvency Act 1986 Insolvency (Northern Ireland) Order 1989
The principal current insolvency legislation in Northern Ireland.
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Insolvency practitioner ("IP")
An individual licensed by a Recognised Professional Body to accept appointment as an insolvency practitioner in relation to a formal insolvency proceeding.
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Insolvency Rules 1986 (as amended)
The detailed procedural rules which accompany and expand the Insolvency Act 1986. There are separate rules for use in Scotland and Northern Ireland
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Interim order
A court order preventing creditors from taking action prior to the approval of an individual voluntary arrangement.
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Law Of Property Act 1925
The Act setting out the powers and duties of a receiver appointed under a mortgage.
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Lien
A right to retain possession of assets or documents until the settlement of a debt.
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Liquidation
The method of winding up a company's affairs. Note the different types:
" Members' voluntary liquidation - where the directors swear an affidavit that the company is solvent and that the creditors will be paid in full, within a year
" Creditors' voluntary liquidation - where the directors cannot swear an affidavit that the company is solvent. The shareholders appoint a liquidator and convene a meeting of creditors to receive a statement of affairs
" Compulsory liquidation - where a creditor or some other eligible person has petitioned the court for the winding-up of the company. The official receiver is initially appointed liquidator, but may arrange the appointment of an IP where the company has assets
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Liquidator
The person charged with the winding up of a company as defined in the Insolvency Act 1986. Must be an IP except that the official receiver will be liquidator in a compulsory liquidation (unless and until an IP is appointed.
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LPA receiver
The receiver of property appointed under the Law of Property Act 1925 under the terms of a mortgage or charge with appropriate powers. An LPA receiver does not deal with floating charge assets or preferential creditors
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Misfeasance
A wrongful act or breach of duty
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Moratorium
An informal arrangement with creditors to defer payment of debts.
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Mortgage
A charge or security over land for the payment of a debt.
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Mortgagee
The lender to whom a mortgage is granted.
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Mortgagor
The borrower who grants a mortgages over his or her property.
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Nominee
An insolvency practitioner appointed to report on a proposal for a company voluntary arrangement or an individual voluntary arrangement
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Official receiver
An officer of the Insolvency Service who has specific responsibilities in respect of bankruptcies and compulsory liquidation.
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Petition
An application to court.
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Preference
A payment or other transaction made with a desire to prefer a particular creditor or creditors over the general body of creditors. Prefer means to put in a better position. A liquidator, administrator or trustee in bankruptcy may apply to court to overturn preferences and recover money or assets for the benefit of creditors generally.
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Preferential creditors
The following amounts due to the Crown and employees rank for payment of dividend ahead of the holders of floating charges and the unsecured creditors:

• PAYE and NIC: 12 months prior to insolvency.
  
• VAT: 6 months prior to insolvency.
  
• Wages: 4 months prior to insolvency - limited to £800 per employee.
  
• Holiday pay: no limits.
  

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Proof of debt
A document submitted by a creditor evidencing the amount due
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Provisional liquidator
An insolvency practitioner appointed, usually to safeguard a company's assets, after the presentation of a winding-up petition (compulsory liquidation) but before a winding-up order is made.
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Proxy
A document enabling a person to vote at a meeting. on behalf of the company, partnership or individual who gave the proxy
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Receiver
A person appointed to take possession of assets. Can be appointed by the Court (for example, in partnership disputes or to seize the proceeds of crime). Can be appointed under powers contained in a charge. The Insolvency Act specifies the method of appointment and powers of an administrative receiver.
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Receivership
The process which follows on from the appointment of a receiver. Includes possibly continued trading, the realisation of assets (perhaps by sale of the business), payment of the chargeholder and dealing where appropriate with preferential and other creditors
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Reservation of title
A provision in a contract for the sale of goods which seeks to ensure that ownership of the goods does not pass to the buyer until the seller has been paid.
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Scheme of arrangement
A compromise or arrangement made under the Companies Act 1985 between a company and its creditors or members.
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Secured lenders
Lenders who have the benefit of mortgages, or fixed or floating charges over the assets of a borrower.
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Security
Some form of document which gives to the lender rights over some or all of the property (of various kinds) of a borrower in the event of failure to repay the amount lent and any interest etc
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Sequestration
The Scottish legal term for bankruptcy.
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Set-off
Deducting what is owed to you from what is owed by you before paying or receiving the net balance
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Shadow director
A person in accordance with whose directions or instructions the directors of a company are accustomed to act.
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Sheriff's officer
A person appointed to deal with the execution of judgments and seizure of goods
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Special manager
A person appointed by the court in compulsory liquidation or bankruptcy proceedings to manage the business
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Statement of affairs
A sworn statement of the assets and liabilities of an insolvent company or individual.
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Statutory demand
A formal demand for payment of a debt. Can form the basis for a petition for winding-up or bankruptcy
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Subrogation
Assuming the rights of a secured creditor, usually after having settled that creditors claim by way of being a guarantor
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Supervisor
The IP who is charged with ensuring that a voluntary arrangement proceeds in accordance with the terms agreed by creditors
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Transaction at undervalue
The disposal of assets for significantly less than their true value. A liquidator, administrator or trustee in bankruptcy may apply to the court to recover the assets or obtain the difference.
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Trustee in bankruptcy
The insolvency practitioner or official receiver appointed in a bankruptcy
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Under sheriff
A person (usually a solicitor), appointed by the sheriff to deal with the day-to-day administration of the sheriff's function.
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Undischarged bankrupt
A bankrupt who has not received his discharge and remains subject to certain prohibitions as to his actions
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Voluntary arrangement
An arrangement between an insolvent individual, partnership or limited company, and the creditors
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Walking possession
An agreement between a bailiff and the judgment debtor that goods seized under an execution or distraint remain in the possession of the debtor, giving the debtor more time to pay.
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Winding-up
See: Liquidation.
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Winding-up order
Court order for compulsory liquidation of a company.
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Writ Of Fi Fa (Fieri Facias)
Writ of execution issued by the court directing a sheriff to levy upon a debtor's goods.
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Wrongful trading
Where it appears to the court, on the application of the liquidator, that any director at the appropriate time knew or ought to have known that the company could not avoid going into insolvent liquidation and continued to incur credit by trading, then the court may order that person to make a payment into the liquidation.
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