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Types of insolvency procedure
We are here to help you all the time - not only through the good times but during periods of difficulty as well. No situation is more challenging to a business than insolvency. So many parties can be affected - family, customers, suppliers, friends and of course - you. We’d like you to think of us as a friend; we can help you in various ways.
Administrations
This procedure places the company under the control of an Insolvency Practitioner, with the protection of the court, with one of the following objectives:
* Rescuing the company as a going concern.
* Achieving a better result for the creditors than would be likely upon a winding up of the company.
* Or if these are not applicable, realising property to make a distribution to the creditors.
Company Voluntary Arrangements (CVAs)
A CVA is a procedure that enables the company to put a proposal to its creditors for a composition in satisfaction of its debts or a scheme of arrangement of its affairs. A composition is an agreement under which creditors agree to accept a certain sum of money in settlement of the debts due to them.
The proposed arrangement requires the approval of at least 75 percent in value of the creditors, and once approved is legally binding on the company and all its creditors, whether or not they voted in favour of it. There is limited involvement by the court, and the scheme is under the control of an insolvency practitioner acting as a supervisor. Typically a CVA will for last from two to four years.
Liquidations
Liquidation (or ‘winding up’) is the most common type of corporate insolvency procedure. Liquidation is the formal winding up of a company’s affairs, entailing the realisation of its assets and the distribution of proceeds in a prescribed order of priority.
A liquidation may be either compulsory, when it is instituted by order of the court, or voluntary, when it is instituted by resolution of the shareholders. Voluntary liquidation is the more common of the two. An insolvent voluntary liquidation is known as a ‘creditors’ voluntary liquidation’ because its conduct is primarily under the control of the creditors. A solvent voluntary liquidation is known as a ‘members’ voluntary liquidation’, because its conduct is primarily under the control of its members
Bankruptcy
Bankruptcy is the administration of the affairs of an insolvent individual by a trustee in the interests of his creditors. When a person becomes bankrupt, the control of all his assets, with certain exceptions, passes to the trustee whose job is to sell them and distribute the proceeds to the creditors.
Voluntary Arrangements
An individual voluntary arrangement (IVA) is an alternative to bankruptcy. It is a legal process that gives an individual, struggling with debts, protection from creditors. The procedure enables the individual to put a proposal to his creditors for a composition in satisfaction of his debts or a scheme of arrangement of his affairs.