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A formal procedure where an Administrator can be appointed by either the directors, shareholders, floating charge holder, or the court for the purpose of rescuing the company as a going concern or achieving a better result for the creditors than would be achieved otherwise or simply to realise assets in order to pay secured or preferential creditors. In this procedure, the assets of the company are quite often sold to new owners [sometimes the former directors] so that a turnaround can be implemented. In the ideal scenario jobs are saved and returns to creditors are enhanced. Administrations must be concluded within 12 months.


A Licensed Insolvency Practitioner who controls the business of the company during the period of the Administration. He will normally continue to work with the Directors in order to achieve the aims of the Administration.

Administrative Receiver

A Licensed Insolvency Practitioner appointed by the holder of a floating charge. He can carry on the company’s business and sell the business and other assets comprised in the charge to repay the secured and preferential creditors. Floating charges created after 15 September 2003 can no appoint Administrative Receivers.

Administrative Receivership

A formal procedure where an Administrative Receiver is appointed by a floating charge holder over the company.

A formal procedure where an individual is made bankrupt by court order. The bankrupt’s assets are realised for the benefit of his creditors. Individuals are normally discharged from bankruptcy within 12 months of the making of the court order. Bankrupts cannot act as Directors without the leave of the court.

Bankruptcy Petition

A Debtor himself or a Creditor can petition for a debtor to be made bankrupt if the debtor passes various insolvency tests that main one being that the creditor is owed more than £750.


The department for Business, Enterprise and Regulatory, previously known as the DTI: A Government agency which amongst other things runs The Insolvency Service in England & Wales. The BERR is headed by the Secretary of State who often directly appoints the Trustee in Bankruptcy.


A court action taken by a creditor against a debtor. Details of the CCJ are passed to the major credit agencies and will appear on any credit check made against the debtor company/person. Usually a sign of financial difficulties.
Company Voluntary Arrangement/CVA

A formal procedure whereby an insolvent company puts a plan to its creditors to settle in full or in part its debts. The plan must be accepted by the requisite majority of creditors and thereafter the company is protected from its former creditors.

Compulsory Liquidation

A formal procedure where a company is placed into liquidation by order of the Court.

Creditors’ Voluntary Liquidation/CVL

A formal procedure relating to an insolvent company. The company ceases to trade and its affairs are wound up by a Liquidator. The procedure is initiated by the shareholders.
Directors Disqualification

Action taken by the BERR to disqualify “unfit” people from acting in the capacity of director in the future for anything between 2 to 15 years. A public record is kept of all such disqualified directors


A right of self help usually taken by a landlord in respect of unpaid rent. The landlord himself or by using a private certificated bailiff can enter upon the premises and remove goods and assets for sale to settle the outstanding rent liability. The court has no part to play in this process.
Fixed Charge

A fixed charge is created by written agreement between a lender and a borrower. The most obvious subject matter of such a charge is immovable property – i.e. a house or factory premises.

Floating Charges

A floating charge is created by written agreement between a lender and a borrower. A floating charge is a form of security granted to a creditor over general assets of the company which are usually constantly changing i.e. stock and raw materials. The company can continue to use such assets without reference to the holder of the floating charge. The lenders rights over such assets can only be exercised when the borrower defaults and the charge is said to “crystallise”. If this happens, the secured creditor can realise the assets to recover its debt.

Fraudulent Trading

A criminal offence where the directors have carried on business with the intent to defraud creditors. Perpetrators can be made personally liable for such a fraud.
Interim order

A protection order for an individual seeking to enter into an IVA.

Whilst the interim order is in place creditors cannot continue with any legal proceedings, including distress or a bankruptcy petition against the debtor.

Individual Voluntary Arrangement / IVA

A formal procedure whereby an insolvent individual puts a plan to his creditors to settle his debts in full or in part. The plan must be accepted by the requisite majority of creditors and thereafter the individual is protected from his former creditors.

Insolvency Practitioner (IP)

See Licensed Insolvency Practitioner.

Licensed Insolvency Practitioner (IP)

An individual duly licensed by one of the licensing bodies who may act as an office holder in any formal insolvency proceedings.  


Usually a formal process whereby the company’s assets are realised for the benefit of creditors and thereafter the company is dissolved and eventually struck of the Register of Companies maintained at Companies House.


A Licensed Insolvency Practitioner appointed by the shareholders [or alternatively in an insolvent liquidation by the creditors] It is the Liquidator’s role to deal with the winding up of a company.

LPA Receiver

A person [not necessarily a Licensed Insolvency Practitioner] appointed by a lender under the provisions of the Law of Property Act 1925 to take control of mortgaged property.

Members’ Voluntary Liquidation/ (MVL)

A formal liquidation process where the company is solvent. The shareholders appoint a Liquidator [who must be a Licensed Insolvency Practitioner] to realise assets and settle all the company’s debts within 12 months of the commencement of the process.


A period of postponement of payment of debts [see Administration, CVA and IVA].


A Licensed Insolvency Practitioner initially engaged by a debtor [CVA and IVA apply] who assists in the preparation of the debtor’s proposal and associated documentation and reports to the court and creditors.

The Nominee is often seen as the “honest broker” between the debtor and the creditors and must seek to ensure that all times he maintains professional objectivity throughout.

Official Receiver

A civil servant employed in The Insolvency Service [an Executive Agency of the BERR]

In Bankruptcy and Compulsory Liquidation the Official Receiver will initially deal with the administration of such cases. In Compulsory Liquidation, it is the Official Receiver who reports to the Secretary of State on the conduct of Directors.

Partnership Voluntary Arrangement (PVA)

A formal insolvency procedure which deals with insolvent partnerships under the provisions of The Insolvent Partnerships Order 1994. A PVA is very similar in its terms and effects as a CVA


A mythical bird, the only one of its kind, which burnt itself on a pyre and rose from the ashes to live again. In the context of insolvency, a pejorative term describing a business that is closed down one day and commences trading the next with the same directors [often responsible for the failure of the first company] utilising the same assets.


A payment or other transaction made by an insolvent company or individual which places a creditor in a better position than they would have been otherwise. Such preferences can be overturned by a liquidator, administrator or trustee in bankruptcy by application to court.

Preferential Creditor

In the main relates to certain employee claims and unpaid pension contributions. Such creditors are listed in Schedule 6 of The Insolvency Act 1986. Such creditors are paid in priority to the claims of unsecured creditors.


Since the implementation of the new Administration procedure in 2003, the term “pre-pack” has arisen to reflect the increasing numbers of sales of businesses on the day or shortly after the date a company is placed into Administration. Effectively, a buyer has been found for the business before formal insolvency proceedings have been commenced and in order to preserve continuity and enhance asset value, the sale is conducted by the Administrator almost immediately after his appointment. A procedure not without controversy.

Reservation of Title/Retention of Title/Romalpa Clauses/ROT

A clause in a contract for the supply of goods which purports to reserve ownership of the goods with the supplier until such goods [and most all other goods supplied by the same supplier] have been paid for in full. Most suppliers of goods now incorporate such terms into their terms of trade.


A security is a charge or mortgage taken on assets [i.e. a house] in order to secure payment of debt.

Shadow Director

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. Sometimes known as a “de facto” director. It would be a criminal offence for a Bankrupt or a disqualified director to act in such a capacity.

Statutory Demand/21 Day Notice

This is a formal demand for payment of a debt over £750. If the debt is not paid within 21 days, the creditor can institute bankruptcy or winding up proceedings. A creditor does not have to obtain a CCJ [see above] before issuing a Statutory Demand.


A Licensed Insolvency Practitioner appointed to supervise the agreed terms of a CVA/IVA

Transaction at an Undervalue

A transaction at an undervalue refers to either a gift or a transaction in which the consideration received is significantly less than that given. Like a Preference [see above] such a transaction can be overturned by a liquidator, administrator or trustee in bankruptcy by application to court.

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.

Unsecured Creditor

This term relates to a creditor who does not hold security or who is not a preferential creditor [see above].

Walking Possession

A seizure of goods by a bailiff or Sheriff. By way of written agreement the goods are left in the possession of the debtor but cannot be sold – it is a criminal offence to do so.

If the debt which is the subject of the Walking Possession is not paid, the bailiff can then enter the premises to remove the goods.

See liquidation.

Winding-up Order

An order made by the Court against a company placing it into compulsory liquidation.

Winding-up Petition

A petition presented to the Court seeking an order that a company be put into compulsory liquidation.

Wrongful trading

Directors of a company in liquidation may be held personally liable by the court and ordered to make a contribution to the company’s assets.

Directors are guilty of Wrongful Trading if they allowed the company to continue trading in circumstances where they should have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation.


This information and the descriptions are designed for general understanding, they may or may not be absolutely correct in every circumstance, we disclaim any potential or actual liability arising from any reliance upon any description in this glossary or any guide on this site. The information and opinions expressed in our website are not necessarily comprehensive and do not purport to give professional advice.MBI coakley Limited is a limited company registered in England and Wales whose registered office is 55 Gower Street, London WC1E 6HQ. Registered in England, number 6513631.

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