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Corporate insolvency

A guide to the main legislative provisions relating to corporate insolvency in England and Wales. The issues that directors of companies in financial difficulty need to take into account are also considered.

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Contents

1. Administration

Chapter 1 looks at administration, a court-based procedure designed to encourage the restructuring and rescue of insolvent companies.

2. Company voluntary arrangement

Chapter 2 covers company voluntary arrangements (CVAs) which are compromises or other contractual arrangements between a company and its creditors governed by the Insolvency Act 1986. They normally contains some form of rescheduling or reduction of the company's debt.

3. Scheme of arrangement

Chapter 3 looks at schemes of arrangement which are compromises or arrangements between a company and its creditors and members. Governed by the CA 2006, they can be used for a number of internal reorganisations by both solvent and insolvent companies.

4. Receivership

Chapter 4 looks at receivership as a form of insolvency procedure. It covers the different types of receiver and outlines their powers and duties.

5. Liquidation

Chapter 5 covers liquidation whereby a liquidator takes control of a company in order to collect in and realise its assets and distribute the net proceeds to creditors. The different types of liquidation are outlined.

6. Provisional liquidation

Chapter 6 looks at provisional liquidation, an emergency procedure designed to preserve a company's assets in the period between the filing of a winding-up petition and the hearing of the petition.

7.Distributions to creditors

Chapter 7 looks the general principles of distribution in corporate insolvency as, by definition, an insolvent company does not have sufficient assets to pay all of its creditors in full.

8. Set off

Chapter 8 covers the rules of insolvency set off which may apply if a company is in liquidation or administration

9. Pre-packaged sales

Chapter 9 looks at 'pre-packaged sales' whereby an insolvent company's business and assets are sold immediately following the placement of the company in a formal insolvency process. The potential advantages and disadvantages are discussed.

10. Issues for directors of companies in financial difficulty

Chapter 10 looks at the difficult decisions directors need to make regarding the management of the company's business and the treatment of its creditors.

11. Directors' duties

Chapter 11 covers directors' duties when a company is insolvent.

12. Disclosure and consultation obligations

Chapter 12 outlines the disclosure and consultation obligations for companies in financial difficulty.

13. Directors' personal liabilities

Chapter 13 looks at the potential personal liabilities for directors of companies facing financial difficulty.

14. Directors' disqualification

Chapter 14 looks at the disqualification of directors in relation to company insolvency.

15. Adjustment of antecedent transactions

Chapter 15 covers transactions entered into before a company goes into an insolvency procedure which may be challenged in court.

Practical tools and other customisable content

This publication includes the following customisable content:

This document provides an overview, and is not intended to be comprehensive or constitute legal advice. Specific legal advice should always be sought in relation to the particular facts of a given situation.

Terms of use

ICAEW members and ACA students can access the publication subject to the conditions set out in the terms of use, copyright statement and disclaimer below.

You are permitted to view, print and download this eBook for your personal use. Unless you have the permission of the copyright owner, you may not re-transmit the publication to anybody else.

Copyright

This publication is the copyright of ICSA Publishing Ltd.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form, or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission, in writing, from the publisher. This publication is a general guide and is correct at the time of writing.

Disclaimer

The publication does not necessarily deal with every important topic or cover every aspect of the topics with which it deals. It is not intended to provide legal advice and should not be treated as a substitute for legal advice. Legal advice should always be sought before taking action based on the information provided. The authors bear no responsibility for errors and omissions.

The Institute of Chartered Accountants in England and Wales (as distributor) disclaims all liability for any errors or omissions.

Corporate insolvency

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Sophie Taylor and Claire Mowbray ICSA Publishing Ltd, 2013

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