Distressed charities

Distressed charities—insolvency

The Insolvency Act 1986 (IA 1986) does not provide an express definition of insolvency. However, two definitions are generally accepted, where liabilities exceed assets ('balance sheet' insolvency) and where debts cannot be paid as and when they fall due ('cash flow' insolvency).

The rules relating to incorporated and unincorporated charities are different. So far as an incorporated charity is concerned, it will be deemed to be 'unable to pay its debts' where it has not paid, secured or settled a claim from a creditor

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