Insolvency offences

Corporate insolvency

Insolvency in broad terms refers to the inability of a company or an individual to pay debts.

The law relating to corporate insolvency was consolidated in the Insolvency Act 1986 (IA 1986), which provides a frame work that governs what happens to a company when it cannot pay its debts.

The statutory regime is complex and reference should be made to Insolvency processes: introductory guides—overview information on the insolvency processes.

Many of the criminal offences created by IA 1986 relate to the failure of a company or an officer of a company to act as required during the course of a company's liquidation.

In practice, the provisions imposing criminal liability are rarely invoked. This is partly because prosecutions under IA 1986 are often expensive, time-consuming, require significant resources and moreover criminal proceedings will not help the creditors to recover their money. Creditors are much more likely to recover their money through the civil courts rather than through a criminal prosecution.

The directors' disqualification procedures are often used as an alternative to prosecution. See Directors’ disqualification—overview.

Not all criminal behaviour in the context