The following Restructuring & Insolvency practice note produced in partnership with David Nicholls of Landmark Chambers provides comprehensive and up to date legal information covering:
A person may die insolvent. Their estate will be insolvent where its value is insufficient to meet all the debts and liabilities in full. In those circumstances, the administration of the estate is governed by the Administration of Insolvent Estates of Deceased Persons Order 1986 (DPO 1986), SI 1986/1999. The DPO 1986, SI 1986/1999 applies to the estates of those who die insolvent, including those who die after a bankruptcy petition has been presented. Its principal effect is to modify the Insolvency Act 1986 (IA 1986).
The insolvent estate must be administered in one of three ways:
by the personal representatives (PRs)
pursuant to an administration action
pursuant to an insolvency administration order
Each of these are considered below.
Administration by PRs takes place out-of-court and out-of-bankruptcy. But the PRs must comply with the law of bankruptcy when dealing with the assets of the estate in relation to the rights of secured and unsecured creditors, proof of debts, the valuation of future and contingent liabilities, the priority of debts and other payments. The PRs do not have to be qualified insolvency practitioners, but they will have to obtain a grant of probate or letters of administration in the usual way.
When the insolvent estate is
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