Glossary of Terms

Administration Order

A court order placing a company, that is, or is likely to become insolvent under the control of an administrator following a petition by the company, its directors or creditors. The purpose of the order is to protect the company assets from creditors to allow a re-organisation or the most advantageous realisation of its assets.

Authorised Insolvency Practitioner

The person authorised by a professional body to act as a trustee, nominee, supervisor, liquidator, administrative receiver or administrator.

Administrative Receiver

Person appointed by the holder of a floating charge debenture over a company’s assets to realise and collect the assets of the company to repay the debenture holder.

Administrator

A licenced insolvency practitioner appointed under an administration order

Asset

Anything that belongs to you and may be used to pay a debt.

Bankrupt

An individual who a bankruptcy order has been made against.

Bankruptcy Order

A court order making an individual bankrupt.

Bankruptcy Petition

Request made, (by a creditor, or by the debtor themselves) to the court, to be made bankrupt and giving the reason why.

Company Voluntary Arrangement (CVA)

A plan of re-organising company debts that is put forward to its creditors and shareholders.

Compulsory Liquidation

The placing of a company into liquidation as a result of an application through the court, normally by a creditor.

Creditor

Someone to whom you owe money.

Creditors Committee

Formed to represent the interests of all creditors in supervising the activities of an administrator.

Creditors Voluntary Liquidation (CVL)

An insolvent company that is put into liquidation .

Debenture

A written document stating the terms of a loan to a company. It is usually secured on the assets of the company or can be unsecured. The lender is referred to as a debenture holder.

Debtor

One who owes money

Discharge

Process to free a bankrupt from the restrictions of bankruptcy and releases them from the bankrupt debts.

Dividend

The sum distributed to each creditor in insolvencies.

Fixed Charge

A form of security over specific assets preventing the debtor from dealing with the assets without the consent of the secured creditor.

Floating Charge

A form of security granted to a creditor over general assets of the company that may change over time in the normal course of business (e.g. stock).

Individual Voluntary Arrangement (IVA)

Procedure of an individual where they come to an arrangement with their creditors on how their debt is to be discharged. The procedure requires court approval and is under the control of a supervisor.

Insolvency Practitioner ( Licensed )

A person authorised by a licensing body and acts as office holder in insolvency proceedings

Insolvent

The inability to pay debts as they fall due

Interim Order

An individual who proposes a voluntary arrangement to his creditors can apply to the court for an interim order, which precludes bankruptcy while the order is in force.

Judgement

Court recognition of a debt where assets are realized and distributed to satisfy liabilities.

Liquidation

The process where the assets of the company are realised, liabilities are met and the surplus (if any) is distributed.

Liquidator

Person appointed to deal with the assets and liabilities of a company, once the resolution to wind it up has been passed or a compulsory winding order has been made.

Member

Shareholder of a company.

Member’s voluntary liquidation (MVL)

A solvent company puts itself into liquidation, the members wish to have the value of their shareholding realised.

Meeting of Creditors

Is held so creditors can appoint an Insolvency Practitioner as trustees or liquidator in place of the Official Receiver.

Members’ Voluntary Liquidation

A solvent liquidation where one appoints a liquidator to realise and settle all the company’s debts within 12 months.

Nominee

Person chosen by an individual to report on the debtor’s proposal for an IVA or CVA

Official Receiver

Civil Servant employed by the Department of Trade and Industry to head the regional offices where responsibility for bankruptcies and compulsory liquidations are held.

Petition

A legal document presented to court with a view to bankruptcy of an individual or compulsory winding up of a company or an application for an administration order.

Proof of debt

Document submitted in an insolvency to establish a creditors claim.

Proxy

Authority given by a creditor or member to another person (proxy holder) to attend, speak and vote at a meeting on behalf of the creditor or member.

Realising an asset

Selling or disposing of an asset to raise money.

Receivership

Term applied following the appointment of a receiver.

Security

A charge or mortgage over assets taken to secure payment of a debt. If the debt is not repaid, the lender has the right to sell the charged assets. Document completed by a bankrupt or a company officer, detailing the assets and liabilities of a company (debts and creditors).

Statutory Demand

A formal notice requiring payment of a debt exceeding £750 within 21 days, in default of which bankruptcy or liquidation proceedings may be commenced.

Supervisor

A licensed insolvency practitioner appointed by the creditors to overseethe manner in which an approved voluntary arrangement is to be implemented.

Trustee

The trustee in bankruptcy is either the official receiver or an insolvency practitioner who takes control of the assets.

Unsecured creditor

A creditor who does not hold security (e.g. a mortgage) over a debt.

Voluntary Arrangement

A scheme of arrangement for business, partnership or individual underthe control of a supervisor.

Winding Up Order

An order made by a court for a company to be placed in compulsory liquidation.

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