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Administration order

An order made in by a court in respect of a company that appoints an administrator to take control of the company. A company can also be put into administration if a floating charge holder, a creditor, or the directors or the company itself file the requisite notice at court.

Administrative receiver

An Insolvency Practitioner appointed by the holder of a debenture that is secured by a floating charge that covers the whole or substantially the whole of the company's assets. The Insolvency Practitioner's task is to realise those assets on behalf of the debenture holder.

Administrative receivership

The process where an insolvency practitioner is appointed by a debenture holder (lender) to realise a company's assets and pay preferential creditors and the debenture holder's debt. The right of a debenture holder to appoint an administrative receiver has been restricted by the Enterprise Act 2002.


An Insolvency Practitioner appointed by the court under an administration order or by a floating charge holder, or creditor, or by the company or its directors filing the requisite notice at court.

Annulment of bankruptcy

Court procedure for where a bankruptcy order is cancelled.


Associates of individuals include family members, relatives, partners and their relatives, employees, employers, trustees in certain trust relationships and companies which the individual controls. Associates of companies include other companies under common control.


Charging order

Court order placing restrictions on the disposal of certain assets, such as property or securities, given after judgment and gives priority of payment over other creditors.


An agreement between a debtor and their creditors whereby the compounding creditors agree with the debtor and between themselves to accept from the debtor payment of less than the amounts due to them in full satisfaction of their debts.

Compulsory liquidation

Winding up of a company after a petition to the court, usually by a creditor

Connected persons

Directors or shadow directors and their associates and associates of a company.

Court appointed receiver

A person, not necessarily a licensed insolvency practitioner, appointed to take charge of assets usually where they are subject to some legal dispute. Not strictly an insolvency process, the procedure may be used other than for a limited company – for example, to settle a partnership dispute.


Someone owed money by an individual, or company or partnership.

Creditors’ committee

A creditors’ committee is formed to represent the interests of all creditors in supervising the activities of an administrator or trustee in bankruptcy, or receiving reports from an administrative receiver.

Cross guarantee

A guarantee (normally given to a bank) by a company or several companies that are part of the same group of companies where money is left to one or more of the companies in the group.


De facto director and managers

A person who is not a De Jure Director but performs the acts or duties of a director.

De jure director

A person who is formally and legally appointed a director.


A document in writing, usually under seal, issued as evidence of a debt or the granting of security for a loan of a fixed sum at interest (or both). The term is often used in relation to loans (usually from banks) secured by charges, including floating charges, over companies' assets. Often also referred to as a floating charge and the lender is often referred to as the debenture holder.


An individual or company that owes money to a creditor, or, a person who has been declared bankrupt or subject to an individual voluntary arrangement.


A person who conducts the affairs of a company.

Disqualification of director

A director found to have conducted the affairs of an insolvent company in an ‘unfit’ manner may be disqualified, on application to the court by the Secretary of State for Business, Innovation and Skills, from holding any management position in a company for between 2 and 15 years.


Any sum distributed to unsecured creditors in an insolvency.


Fidelity bond

Insurance cover required by a person who acts as an insolvency practitioner to protect creditors’ money.

Fixed charge

A fixed charge is a form of security granted over specific assets, preventing the debtor dealing with those assets without the consent of the secured creditor. It gives the secured creditor a first claim on the proceeds of sale, and the creditor can usually appoint a receiver to realise the assets in the event of default.

Floating charge

A floating charge is a form of security granted to a creditor over general assets of a company, which may change from time to time in the normal course of business (e.g. stock). The company can continue to use the assets in its business until an event of default occurs and the charge crystallises. If this happens, the secured creditor can realise the assets to recover its debt, and obtain the net proceeds of sale subject to the prior claims of the preferential creditors.

Fraudulent trading

Where a company carries on business with intent to defraud creditors or for any fraudulent purpose. It is a criminal offence and those involved can be made liable to make such contributions (if any) to the company's assets.



An agreement to pay a debt owed by a third party. It must be evidenced in writing for it to be enforceable.


Insolvency Practitioner (IP)

Person licensed by one of the chartered accountancy bodies, The Law Society, The Insolvency Practitioners Association or the Department of Trade. The only person who may act as an office holder in an insolvency proceedings.

Interim order

An individual who intends to propose a voluntary arrangement to their creditors may apply to the court for an interim order, which, if granted, precludes bankruptcy and other legal proceedings whilst the order is in force.



A debt that remains unpaid by an individual or company.


Right to retain possession of assets or documents until the settlement of a debt.

Liquidation committee

Committee of creditors appointed to assist the liquidation in conducting the liquidation.


The Official Receiver or an Insolvency Practitioner appointed to administer the liquidation of a company or partnership.

LPA receiver

A receiver appointed under the provisions of the Law of Property Act (LPA) 1925 (not necessarily an Insolvency Practitioner) to take charge of a mortgaged property by a lender whose loan is in default, usually with a view to sale or to collect rental income for the lender. Common in the case of the failure of a property developer, whose borrowing will largely be secured on specific properties.


Member (of a company)

A person who has agreed to be, and is registered as, a member, such as a shareholder of a limited company.


Breach of duty in relation to the funds or property of a company by its directors.



An Insolvency Practitioner who carries out the preparatory work for a voluntary arrangement, before its implementation.


Office holder

A liquidator, provisional liquidator, administrator, administrative receiver, supervisor of a voluntary arrangement, or trustee in bankruptcy.

Officer (of a company)

A director or secretary of a company.

Official Receiver (OR)

An officer of the court, who acts as an interim receiver (for an individual), provisional liquidator (for a company), receiver, trustee or liquidator.

Onerous property

The term onerous property in the context of a liquidation or bankruptcy, applies to unprofitable contracts and to property that is unsaleable or not easily saleable or which might give rise to a liability to pay money or perform any other onerous act. A liquidator or a trustee can disclaim such property.



A formal application made to a court.


A payment or other transaction in the period preceding a liquidation, administration or bankruptcy, which places a creditor or a person connected with the insolvent, respectively, in a better position than they would have been otherwise. A liquidator, administrator or trustee in bankruptcy may recover any sums that are found to be preferences.

Preferential creditor

Defined in Schedule 6 of The Insolvency Act 1986. Has priority when a liquidator, administrative receiver, administrator or trustee distributes funds.

Proof of debt

Document submitted by a creditor to the Insolvency Practitioner giving evidence of the amount of the debt.

Provisional liquidator

An Insolvency Practitioner appointed to safeguard a company’s assets after presentation of a winding-up petition but before a winding-up order is made.


Document whereby a creditor authorises another person to represent them at a meeting of creditors. The proxy may be a general proxy, giving the proxy holder a discretion as to how they vote, or a special proxy requiring him to vote as directed by the creditor. A company can only be represented by a proxy holder.

Public examination

When a company is being wound up or in bankruptcy proceedings, the Official Receiver may at any time apply to the court to question the company's director(s) or any other person who has taken part in the promotion, formation or management of the company or the bankrupt.



Is often used to describe an administrative receiver, who may be appointed by a secured creditor holding a floating charge over a company’s assets. The term can also mean a person appointed by the court or with the power to receive the rent and profits of property.


A company in administrative receivership is often said to be "in receivership".


The process by which the Official Receiver or an Insolvency Practitioner is discharged from the liabilities of office as trustee/liquidator or administrator.

Reservation of title

A provision under a contract for the supply of goods that purports to reserve ownership of the goods with the supplier until payment has been received for the goods. A complex and continually evolving area of law.

Retention of title

See reservation of title.



A charge or mortgage over assets taken to secure payment of a debt. If the debt is not paid, the lender has a right to sell the charged assets. Security documents can be very complex. The commonest example is a mortgage over a property.

Shadow director

A person who is not formally appointed as a director, but in accordance with whose directions or instructions the directors of a company are accustomed to act. However, a person is not a shadow director merely because the directors act on advice given by him in a professional capacity.

Special manager

A person appointed by the court in a compulsory liquidation or bankruptcy to assist the liquidator, official receiver or trustee in managing the insolvent business.

Specific bond

See Fidelity Bond.

Statement of affairs

A document, completed by a bankrupt, company officer or director(s), signed as Statement of Truth, stating the assets and giving details of assets and liabilities.

Statutory demand

A formal notice requiring payment of a debt exceeding £750 within 18 days (individual) or 21 days (business) in default of which bankruptcy or liquidation proceedings may be commenced without further notice.


An insolvency Practitioner appointed to supervise the carrying out of a company voluntary arrangement or individual voluntary arrangements.


Transaction at an undervalue

A transaction at an undervalue can describe either a gift or a transaction in which the consideration received is significantly less than that it is worth. In certain circumstances an administrator, a liquidator or a trustee can challenge such a transaction.


Unsecured creditor

Commonly used to refer to any ordinary creditor, who has no secured preferential or status rights.


VAT bad debt relief

The relief obtained in respect of the VAT element of an unpaid debt.

Voluntary liquidation

A method of liquidation not involving the courts or the Official Receiver. There are 2 types of voluntary liquidation - members' voluntary liquidation for solvent companies and creditors' voluntary liquidation for insolvent companies.


Winding up order

Order made by the court, usually based on a creditor's petition, for a company to be placed in compulsory liquidation.

Winding up petition

A winding-up petition is a petition presented to the court seeking an order that a company is placed into compulsory liquidation.

Wrongful trading

Applies to companies in liquidation where a director allowed the company to continue trading in circumstances  where the director knew or ought to have concluded that there was no reasonable prospect of avoiding insolvent liquidation and they did not take every step with a view to minimising the potential loss to the company's creditors.  The directors may be liable to make such contribution to the company's assets as the court thinks proper.