Glossary

A company administration order is an order of the Court directing an insolvency practitioner, called the Administrator, to manage the affairs of a company.

In law, receivership is the situation in which an institution or enterprise is being held by a receiver, a person placed in the custodial responsibility for the property of others, including tangible and intangible assets and rights.

Various types of receiver appointments exist

1. a receiver appointed by a (government) regulator pursuant to a statute;
2. a privately appointed receiver; and
3. a court-appointed receiver

The receiver's powers flow from the document(s) underlying his appointment – a statute, financing agreement, or court order.

A CCJ is a court order for unpaid debt issued by a County Court or higher court. The judgment will be recorded (only if it is not paid within 28 days from the date of the judgement) and the record will show up during any credit checks, and may count against a mortgage application.

A writ is a formal written order issued by a body with judicial jurisdiction, generally a court (and in this case the High Court). Types of writ include warrants and subpoenas among others.

A 'Petition' is a legal term for an application to a court for an order to be made. A winding up petition is an application to the High Court, or a county court with the appropriate jurisdiction, which may order the winding-up of a company. This may be, for example, on the petition of a creditor or creditors on the grounds that the company cannot pay its debts.

A company is regarded as unable to pay its debts if, for example, a creditor:

• is owed more than £750
• presents a written demand in the prescribed form (known as a statutory demand) to the company; and
• the company fails to pay, secure or agree a settlement of the debt to the creditor’s reasonable satisfaction.

The court may also order the company to be wound up on the petition of:

• the company itself;
• the company’s directors or one or more members;
• the Secretary of State for Business Enterprise and Regulatory Reform;
• the Financial Services Authority (formerly the Securities and Investment Board);
• the Official Receiver

Unless the court directs other arrangements, the petition must be advertised in the London Gazette. Once the petition has been advertised, the company will have its bank account automatically frozen by its bank. Once the petition has been advertised, it cannot be withdrawn. If the court grants the petition and makes the winding up order, the company is placed into Compulsory Liquidation, at which point the Official Receiver is appointed the Liquidator.

The Official Receiver has a duty to investigate the company’s affairs, the conduct of the directors, and the causes of its failure.

Voluntary winding up is a liquidation procedure initiated by the management of a business. Members’ voluntary winding up involves a statutory declaration by directors. Creditors’ voluntary winding up involves a meeting of creditors, who have a right to appoint a liquidator. When a company agrees and passes a resolution for voluntary winding up, it gives notice of the resolution by advertisement in the Gazette within 14 days of passing the resolution.

A CVA is a procedure whereby a plan of reorganisation or composition in satisfaction of debts is put forward to creditors and shareholders. There is limited involvement by the court and the scheme is under the control of a licensed insolvency practitioner, known as a ‘supervisor’ in these cases. There is always viability in this sort of case, so the business can be turned around. In essence a CVA involves moving around debts, part paying them and arranging a new injection of cash to secure the future of the business. If a CVA cannot be agreed then the business will become insolvent and will be liquidated.

A company may apply to the registrar to be struck off the register and dissolved. The company can do this if it is no longer needed. For example, the directors may wish to retire and there is no one to take over from them; or the company is a subsidiary whose name is no longer needed; or it was set up to exploit an idea that turned out not to be feasible. Some companies that are dormant or non-trading choose to apply for strike off.