Date 31 March 2011
Administration
Administration is a process which places a company under the control of a licensed insolvency practitioner and the protection of the court to achieve a specified statutory purpose. The purpose of administration is to save the company, or if that is not possible, to achieve a better result for creditors than a liquidation, or if neither of those is possible, to realise property to enable funds to be distributed to secured or preferential creditors.
Annulment
Annulment of a bankruptcy effectively takes the position back as if the bankruptcy order had never been made; and can take place several years after the bankruptcy order was made. A bankrupt may apply for annulment of a bankruptcy order on the grounds either that it should not have been made (e.g. because of a technical legal flaw in the application) or that all the costs and debts of the bankruptcy have been paid in full.
Bankrupt
A bankrupt is an individual against whom a bankruptcy order has been made by the court. The order signifies that the individual is unable to pay his/her debts and deprives him/her of his/her property, which is then realised for distribution amongst his/her creditors.
Company Voluntary Arrangement (CVA)
A company voluntary arrangement is a voluntary procedure whereby an insolvent company puts a plan to its creditors to settle its debts in full or part. The plan must be accepted by the requisite majority of creditors and thereafter the company is protected from its former creditors.
Liquidation
Liquidation is the process whereby a company has its assets realised and distributed to satisfy, insofar as is possible, its liabilities and to repay its shareholders. The term winding-up is also used. Liquidation is usually a terminal process, followed by the dissolution of the company.
LPA Receiver
A Law of Property Act 1925 receiver is 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.
Members’ Voluntary Liquidation (MVL)
A members’ voluntary liquidation is a solvent liquidation where the shareholders appoint the liquidator to realise assets and settle all the company’s debts, plus interest, in full within 12 months.
Preferential Creditor
A creditor who is entitled to receive certain payments in priority to floating charge holders and other unsecured creditors. These creditors include occupational pension schemes and employees.
Retention of Title Clause
Also known as a Romalpa Clause, their purpose is to give the seller of goods priority over secured and unsecured creditors of the buyer if the buyer fails to pay for the goods, for example, because of insolvency. This is achieved by providing that title to the goods is retained by the seller until it has received full payment for the item.
Special Manager
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 a licensed insolvency practitioner.
Statutory Demand
A statutory demand is 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. A statutory demand should not be used where the debtor can show a substantive dispute.
Trustee in Bankruptcy
A licensed insolvency practitioner appointed by the court, Secretary of State or creditors to realise the assets of a bankrupt for the benefit of creditors. He is an officer of the court.
If you would like more information or advice relating to a specific matter, please do not hesitate to contact Robert Ryall on 01727 798084 or by email at robert.ryall@salaw.com or any member of the Commercial Dispute Resolution team.
© SA LAW 2011
Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them. You are recommended to obtain specific advice in respect of individual cases.