The Compendium

Practical signs of insolvency:

Corporate

• Cannot pay wages and salaries
• Cannot pay a supplier of goods
• Cannot pay loan repayment
• Over bank overdraft limit
• High Court Enforcement Officer (Bailiff) attending premises to take assets
• Increasingly large HMRC debts and demands for repayment
• Unable to pay rent

Personal

• Cannot pay mortgage/rent
• Cannot pay utility bills
• Consistently over the bank’s overdraft limit
• Unable to repay a bank loan payment
• Cannot meet minimum payments on credit cards
• Increasingly large HMRC debts and demands for repayment
• Cannot afford buy groceries

[See ‘Insolvency Act’, ‘Preference’ and ‘Company’.]

Insolvency Act 1986

The Insolvency Act 1986 (IA 1986) is one of two pieces of prime legislation used to process, inform and conduct insolvency, restructuring and advisory services in England and Wales. The other is the Insolvency Rules 2016 (IR 2016).

The IA will tell Practitioners what they can do (whereas the Rules tell them how they can do it).

The statute is updated regularly, usually by ‘statutory instruments’, which will update such things as fees, penalties and charges, etc. This is, things that do not need to go through the Parliamentary process of constructing new statute.

Statutory instruments are Government or executive orders of subordinate legislation – they do not need to go through both Houses of Parliament to be made official.

The statute is in three main parts (as all statutes are): the first is a ‘preamble’ – a set of contents pages, setting out the section numbers, what they relate to and