Types of insolvency

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Insolvency in the UK is:

  1. •

    governed by the Insolvency Act 1986 (IA 1986) and the Insolvency Rules 2016, SI 2016/1024

  2. •

    subject to the jurisdiction of the High Court and designated county courts

Companies in financial difficulty may be subject to the following insolvency procedures:

  1. •

    company voluntary arrangements (CVAs)

  2. •

    administration

  3. •

    liquidation/winding up (compulsory or voluntary)

  4. •

    receivership

Administration

Administration is the most common of the insolvency procedures. A company in administration still exists legally and can continue to trade. Administration is designed to rescue and restructure a company that has become insolvent.

An administrator may be appointed either:

  1. •

    out of court, by a qualifying floating charge holder or by the company or its directors, or

  2. •

    by the court, on application by the company, its directors or one or more of its creditors

The objective of administration is to:

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