When your business is going into insolvency, it can feel like you’re lost at sea. What you’ve worked so hard for has, in its current incarnation at least, come to an end. If your business has been deemed insolvent, then in many countries it’s the law that you must employ a licensed insolvency practitioner to carry out the formal insolvency proceedings on your business.
It’s at this stage where much of the confusion begins. Insolvency is a legal matter, and as such is flooded with legal terms which in turn confuse and obfuscate their true meaning. In this guide, we’re going to share with you some of the most common terms you’ll encounter as you go through the insolvency procedure. Let’s get started:
– Administration: The process by which your company is placed under the control of a licensed insolvency practitioner and the protection of the country to achieve a specific statutory purpose. The purpose of administration is always to save the company, however, if that isn’t possible, it is to achieve a better result for creditors than if your business were liquidated. Of neither of those are possible, they will aim to liquidate property and assets in order to settle debts or secure preferential creditors.
– Administration Order: This is typically a court order placed a company under the control of an administrator, following a petition by the company, its directors, its liquidator or a credit.
– Bankrupt: If you’re declared bankrupt, it means that a bankruptcy order has been made by the court against you. This order signifies that you’re unable to pay your debts and will deprive you of your property, which will then be liquidated and distributed amongst your creditors.
– LPA Receiver: The Law of Property Act of 1925 receiver (LPA) is a person appointed to take charge of a mortgaged property by a lender whose loan is in default. This person does not have to be a licensed insolvency practitioner. The typical purpose of this is to create a sale or collect rental income for the lender.
– Winding-up Order: An order made by the court for a company to be placed in compulsory liquidation.
– Winding-up Petition: Often confused with a winding-up order, a winding-up petition is a petition presented to the court seeking an order that the company is put into compulsory liquidation. It is then up to the courts to decide whether that is what happens.
WalshTaylor are one of the North’s leading Insolvency practitioners and offer assistance to businesses in trouble each and every day. Their helpful and friendly staff are always happy to take a phone call, so if you’re looking for licensed insolvency practitioners look no further than WalshTaylor.
Article Source: http://EzineArticles.com/expert/Alec_James/2053496