The term 'Act of Bankruptcy' refers to actions or behavior indicating that a person or entity might be judged as bankrupt. Such behavior often includes transferring property titles to others with the intent to delay or defraud creditors and admitting bankruptcy.
A term used to describe the state of a business that has failed, where all of its assets and properties are liquidated because there is no more work or business activities to conduct.
Asset deficiency is a financial condition where a company's liabilities exceed its assets, raising concerns about the organization's financial viability.
Bankruptcy is the state of an individual or entity unable to pay off their debts. A court-ordered bankruptcy order leads to the liquidation of the bankrupt's assets to repay creditors.
A specialized court established by Congress, pursuant to Article I of the Constitution, to address matters arising in or under a bankruptcy case.
Informal slang term meaning bankrupt, derived from the posture of a dead fish lying with its belly facing up.
The act of ceasing trading activities within a business, including winding down operations and finalizing outstanding financial obligations.
Chapter 7 of the 1978 Bankruptcy Act focuses on liquidation, which involves the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors.
A Company Voluntary Arrangement (CVA) is a legally-binding arrangement between a company and its creditors to restructure debt. This process helps businesses avoid bankruptcy by agreeing to pay back a portion of what they owe over a fixed period.
A Company Voluntary Arrangement (CVA) is a legally binding agreement between a company and its creditors to restructure debt and avoid liquidation.
Compulsory liquidation, also known as compulsory winding-up, is the process of liquidating a company by a court order. This detailed guide covers its definition, examples, frequently asked questions, related terms, and further reading suggestions.
Creditors' Voluntary Liquidation (CVL) is the process of winding up a company by a special resolution of its members when the company is insolvent. It involves a meeting with creditors and appointing a liquidator to manage the liquidation process.
A debtor is an individual or entity that owes money to another party, typically referred to as a creditor. In bankruptcy or similar legal proceedings, a debtor is the subject on whom the actions are primarily focused.
A written agreement between a debtor and their creditors, registered with the Insolvency Service, which outlines the repayment of debts or restructuring of debtor's affairs.
A defunct company is a business entity that has been wound up and has therefore ceased to exist. This could occur due to insolvency, voluntary dissolution by its owners, or other legal reasons.
Discharge in bankruptcy refers to the formal release of a debtor from the legal obligation to pay off all or a portion of their debt, typically following bankruptcy proceedings. It removes the debtor's liability for certain debts while providing a fresh financial start.
Financial distress refers to a situation in which the activity of a business is influenced by the possibility of impending insolvency. This state incurs various costs, ranging from those related to bankruptcy to costs arising from stakeholders' changes in behavior and managerial focus.
A fraudulent conveyance is the deliberate transfer of property to another person with the intention of putting it beyond the reach of creditors. Legal scrutiny under statutes like the Insolvency Act 1986 can result in such transactions being set aside by the court.
A legal precedent established in 1904, critical to determining financial obligations during the dissolution of a partnership, especially when dealing with the insolvency of a partner.
An illegal dividend is a dividend declared by a corporation's board of directors in violation of its charter or state laws, typically including dividends paid out of capital surplus or those that would render the corporation insolvent.
An Individual Voluntary Arrangement (IVA) is a formal, legally-binding agreement between an individual and their creditors to pay off debts over a set period, usually managed by an insolvency practitioner.
An Individual Voluntary Arrangement (IVA) is a legally binding agreement between a person and their creditors to pay off their debts over a specified period, often with reduced payments.
Inability to pay one's debts when they fall due, which may lead to bankruptcy for individuals or liquidation for companies.
A legal mechanism through which the estate of a deceased debtor is administratively handled in cases of insolvency, often drawing from principles of bankruptcy law.
Judgment proof refers to individuals from whom a creditor cannot collect money, even if there is a court order stating that a debt is owed. This status typically applies to people who are insolvent or whose wages or assets are protected by state law.
A person appointed to manage the winding-up process of a company, ensuring orderly asset distribution to creditors and members.
Members' Voluntary Liquidation (MVL) is the process of winding up a solvent company by the members' resolution, followed by the appointment of a liquidator and declaration of solvency by directors.
Negative Net Worth, also referred to as Deficit Net Worth, occurs when an individual's or a company's liabilities exceed their assets. This financial condition indicates that the value of obligations outweighs the owned resources.
An Official Receiver (OR) is a person appointed by the Secretary of State for Business, Innovation and Skills to act as a receiver in bankruptcy and winding-up cases. Official receivers are officers of the court, usually acting as liquidators in company windups.
An Official Receiver (OR) is an officer of the court, appointed to manage the estates of insolvent companies or bankrupt individuals. They are responsible for administering the insolvency processes, including the realization and distribution of assets.
Preference occurs when an insolvent debtor favours a particular creditor, such as by paying one creditor in full, to the disadvantage of other creditors. If the debtor becomes bankrupt or goes into insolvent liquidation, the court can order restoration to ensure equitable treatment among all creditors.
An obligation that is prioritized for repayment over other debts.
An irrevocable trust used to fund deferred compensation benefits for key employees in the absence of a qualified plan or trust, ensuring some financial security against company risks.
Receivership is a process where an appointed receiver manages a company's assets to repay debt owed to a lender due to the company's default or insolvency.
Recontracting is the renegotiation of contracts between a company in financial distress and its creditors to establish more favorable terms.
The concept of ring-fencing is used in finance and corporate restructuring to isolate a certain portion of assets, liabilities, or operations to protect the rest of the company or to dedicate specific funds for particular purposes.
A comprehensive document that outlines a debtor's assets, liabilities, and creditor details in the context of bankruptcy proceedings, essential for assessing financial status during insolvency.
A statutory demand is a formal request issued by a creditor to a debtor demanding the repayment of an outstanding debt. It serves as evidence of a debtor's inability to pay if unmet, and can support a compulsory liquidation petition under the Insolvency Act 1986.
A trustee in bankruptcy is an individual or entity appointed to manage the property and financial affairs of a bankrupt individual or entity. The trustee's responsibilities include collecting and liquidating assets, distributing the proceeds to creditors, and ensuring that the bankruptcy process is conducted in accordance with applicable laws.
Voluntary bankruptcy is a legal proceeding initiated by the debtor who files a petition of bankruptcy in the appropriate U.S. district court under the Bankruptcy Act. This process contrasts with involuntary bankruptcy, where creditors petition the court to declare the debtor insolvent.
Winding-up is the process of dissolving a company by liquidating its assets to pay off creditors and distributing any remaining assets to shareholders.
A winding-up petition is a legal document presented to a court in the UK, seeking an order for a company to be placed into compulsory liquidation, typically due to insolvency.
A zombie company is a business that continues to operate despite being insolvent or bankrupt, often propped up by banks or investors even though it does not generate sufficient revenue to service its debts.
