Insolvency

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This Overview signposts key resources on insolvency issues in local government, from section 114 practice to authorities’ roles as creditors in personal and corporate insolvency.

Local authorities are not subject to corporate insolvency procedures. Financial failure is addressed through public law controls, principally the chief finance officer’s duty to report under section 114 of the Local Government Finance Act 1988, alongside the section 151 duty under the Local Government Act 1972 and the prudential framework in the Local Government Act 2003. Practitioners must understand the legal effects of a section 114 report, the consequent spending restrictions, the requirement for a council meeting, and the interaction with Best Value under the Local Government Act 1999 and potential intervention by the Secretary of State (DLUHC).

Authorities also act as creditors. The Overview covers recovery of council tax and non - domestic rates, escalation from liability orders to enforcement, and the proper use of bankruptcy petitions and winding - up petitions in light of government guidance and vulnerability considerations. It explains treatment of local tax liabilities in bankruptcy and liquidation under the Insolvency Act 1986 and the Insolvency (England and Wales) Rules 2016, and...

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