Charity insolvency—a guide to available insolvency procedures
Produced in partnership with Rebecca Walker of Irwin Mitchell
Charity insolvency—a guide to available insolvency procedures

The following Restructuring & Insolvency guidance note Produced in partnership with Rebecca Walker of Irwin Mitchell provides comprehensive and up to date legal information covering:

  • Charity insolvency—a guide to available insolvency procedures
  • Available insolvency procedures

In Charity Commission for England and Wales v Thrift Urban Housing Ltd, the Charity Commission was successful in its petition to wind up a charity under the Insolvency Act 1986 (IA 1986) on the ground that it was just and equitable to do so. This was the first time that the Charity Commission has exercised its power under section 113 of the Charities Act 2011 (CA 2011) to present a winding-up petition against a charity where there has been misconduct or mismanagement in its administration or there is a need to protect its property. The court’s approach in deciding the petition reflected the approach taken to public interest winding-up petitions presented by the Secretary of State under IA 1986, s 124A.

CA 2011, s 1 defines a charity as an institution that is:

  1. established for charitable purposes only; and

  2. falls to be subject to the control of the High Court in the exercise of its jurisdiction with respect to charities

It is important to note that a charity is a status conferred on an institution because of the activities it carries out. A charity is not a type of legal structure.

Available insolvency procedures

The insolvency procedures available to a charity very much depend on how the charity is constituted. The purpose of this note is to set out the insolvency procedures