Insolvency law

 

Insolvency law covers both corporate insolvency and personal insolvency. Personal insolvency is otherwise known as bankruptcy and refers to an individual person who cannot pay their debts. Corporate insolvency refers to a company that cannot pay its debts.

Insolvency law, relating to a bankrupt, allows either a creditor or the debtor to make a petition for the debtor’s bankruptcy. Both petitions are available by virtue of the Insolvency Act 1986. In the alternative, it is possible for the debtor to enter into an Individual Voluntary Arrangement, or IVA, which allows the debtor to enter into an agreement with their creditors, supervised by an insolvency practitioner. If a bankruptcy order is made by the court following a petition by either the debtor or the creditors the debtor will automatically be discharged from bankruptcy after one year. During this time, the debtor will be subject to certain constraints, including being unable to obtain credit of more than a prescribed limit.

Insolvency law also covers corporate insolvency. Corporate insolvency law includes measures to attempt to rescue ailing companies. Company Voluntary Arrangements (CVAs) and administration are both procedures introduced by the Insolvency Act 1986, the aim of which is to return a company to normal trading. In the event these procedures cannot save a company, they aim is to maximise the return for creditors. If it is not appropriate to use a rescue mechanism, or a rescue mechanism has failed, a company will go into liquidation.

If you would like to obtain advice on insolvency law, Caven can put you in touch with a local specialist insolvency solicitor free of charge. So, if you have any questions or would like our help in finding local insolvency solicitors please call us on 08001 221 2299 or complete the web-form above.

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