Northpoint

Jargon

All industries have jargon so this list of terms should aid readers understanding. The descriptions are for general understanding only.

Administration Order
A court order placing a company, that is, or is likely to be made 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 the Department of Trade and Industry or 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.

Assets
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 by resolution of it’s members.

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.

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.

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.

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.

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.

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.

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.

Statement of affairs
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.

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.

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