Insolvency processes: introductory guides

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When a company’s financial position reaches a point where its assets exceed its liabilities or it is unable to pay its debts as they fall due, it may be necessary or desirable to place it into an insolvency process. Some insolvency processes are available even if the company is solvent and some may result in the rescue of the company.

In appropriate circumstances, a restructuring can serve as an alternative to an insolvency process. For more information, see: Informal restructuring tools—overview.

For an introductory guide to restructuring and insolvency, including links to our key resources, see Practice Note: Restructuring & Insolvency—new starter guide.

To access the R3 creditor guides which explain the rights of creditors during administration, administrative receivership, bankruptcy, compulsory liquidation and creditors’ voluntary liquidation, see Practice Note: R3 creditor guides.

Administration

Administration is a short-term measure for a company in financial difficulty. The administrator can be appointed out of

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Latest Restructuring & Insolvency News

High Court clarifies position of sole directors under Model Articles and the interaction between UK sanctions regulations and in-court appointment of administrators (Re KRF Services (UK) Ltd and others)

Restructuring & Insolvency analysis: This High Court case (which addresses two important issues in UK company law and sanctions regulations) will be of interest to insolvency practitioners, corporate and restructuring lawyers, sanctions lawyers, and businesses and individuals which are affected by sanctions. Firstly, it clarifies the position of sole directors under the Model Articles for private limited companies. The court ruled that a sole director can validly pass board resolutions and bind the company, regardless of whether they have always been the sole director or were previously part of a multi-member board. This interpretation resolves conflicts between Article 7(2) and Article 11(2) of the Model Articles, with the court favouring Article 7(2)'s provisions. Secondly, the case examines the interaction between UK sanctions regulations and the in-court appointment of administrators. The court determined that making an administration application and order does not breach asset-freezing sanctions, even when the company is designated or controlled by a sanctioned person. While an Office of Financial Sanctions Implementation (OFSI) license is typically required for administrators to act, the court retains discretion to make immediate appointments in urgent situations. Written by Joshua Ray and Duncan Henderson, partners at CANDEY, which acted for the applicants on this matter.

Insolvency Service bans director for BBL fraud

The Insolvency Service has banned Nazia Khan, a sales consultant based in Dubai, from serving as company director for nine years for fraudulently securing a £25,000 bounce back loan (BBL) for her inactive company, LC247 Limited, by falsely declaring a £100,000 turnover. Khan misappropriated the funds for personal use, contravening the scheme's regulations and the company went into liquidation in February 2022, with debts surpassing £28,000.

Restructuring & Insolvency weekly highlights—5 December 2024

This week's edition of Restructuring & Insolvency weekly highlights includes: the need for expert evidence in Part 26A restructuring plans to comply with CPR 35 (Re Chaptre Finance Plc), an analysis of applications to set aside default judgment in insolvency proceedings (Scenic International Group Ltd (in provisional liquidation) v Adenaike), an analysis of successful fraudulent trading and other claims (London Capital & Finance v Thomson), plus a round-up of other news and cases for restructuring and insolvency professionals.

UKSC and JCPC launch new websites and online Case Management Portal

The UK Supreme Court (UKSC) and Judicial Committee of the Privy Council (JCPC) have introduced new websites and a new online case management portal. This digital platform enables registered users to submit and manage case information electronically, offering a range of functions including applications for Permission to Appeal, submission of case-related documents and payments, case correspondence, progress monitoring, and direct communication with the Registry.

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