BankruptcyA Useful Glossary of Common Terms.....BankruptcyBankruptcy OrderDischarged BankruptChargeCompany Voluntary ArrangementDisqualification of DirectorsFraudulent TradingTrusteeCompulsory LiquidationAnnulmentAssetsCompulsory LiquidationCreditorDirectorDisqualificationDividendGuaranteePetitionPreferential creditorProof of debtProxyRealiseRescissionReleaseSecured CreditorShadow directorStatement of affairsSupervisorVoluntary liquidationWinding up orderBankruptcyA bankruptcy, which is normally a debtor’s last resort, happens when lenders take his or her assets – house or vehicle – and sells them to settle part of the debt. Back to TopBankruptcy OrderThis court order declares someone as being bankrupt. Back to TopDischarged BankruptPeople who repay their debt or whose debt gets written off and then get discharged from the bankruptcy. Back to TopChargeA charge is when real or personal property is seized to pay off a debt. It allows the creditor no property in, or possession of, the security’s subject. Back to TopCompany Voluntary ArrangementThis procedure aims to reorganize or combine a company’s debt. A supervisor consults the company’s creditors and shareholders beforehand and the court has minimal involvement in this scheme. Back to TopDisqualification of DirectorsShould a company director be guilty of conducting an insolvent company’s affairs in an unfit manner, he or she may be disqualified. The DTI needs to apply to the court and this may lead to a ban on the director’s involvement in any management position for between two and 15 years. Back to TopFraudulent TradingThis type of trading is where a company carries on operating with intent to defraud creditors, or for any fraudulent purpose. This is a criminal offence and those involved may be personally liable. Back to TopTrusteeAuthorised insolvency practitioners deal with a bankrupt’s estate. Deeds of arrangements rely on an authorised insolvency practitioner to deal with the person’s estate who is entered into the deed. Back to TopCompulsory LiquidationA creditor appeals for a company’s liquidation. Back to TopAnnulmentTermination of contracts. Back to TopAssetsItems which are owned by the debtor which can be used to clear his/her debts Back to TopCompulsory LiquidationClosing down of a company after a formal application has been made to the court – usually by a creditor Back to TopCreditorAn individual who is owed money by a bankrupt or business. Back to TopDirectorAn individual who carries out the affairs of an organisation. Back to TopDisqualificationDisqualification is the process whereby a court order action has been raised against an individual which makes it illegal for that individual to be involved as a director or indeed the management of any organisation for the term detailed in that court order (unless the court gives permission again). Back to TopDividendMonies given to unsecured creditors in a liquidation situation. Back to TopGuaranteeA written agreement to reimburse a debt owed by a third party. Back to TopPetitionAn official submission made to court. Back to TopPreferential creditorA preferential creditor is someone who is permitted to get paid before floating charge holders and any other unsecured creditors. This includes occupational pension schemes and employees. Back to TopProof of debtA legal form which is completed and submitted by a creditor in a compulsory liquidation situation to detail amounts claimed. This form is provided by the liquidator. Back to TopProxyIf you are unable to attend a meeting, you can arrange to select someone else to attend on your behalf. Back to TopRealiseTo realise an asset is to sell it in order to raise funds. Back to TopRescissionThis is the term used when a winding-up order is being called off. Back to TopReleaseThe procedure of how the Official Receiver or Insolvency Practitioner is ‘released’ from the duties of bankruptcy trustee, liquidator or administrator. Back to TopSecured CreditorA secured creditor is someone who holds collateral (e.g. a mortgage) over an individuals assets for any finance owed. Back to TopShadow directorAn individual who instructs directors or an organisation which has not been officially appointed as a ‘director’ or that organisation. Back to TopStatement of affairsA paper which has been written by the bankrupt and has been sworn to under oath. It includes the details of all assets and information on all associated debts and creditors involved. Back to TopSupervisorA supervisor is an Insolvency Practitioner who has been assigned to deliver a company voluntary arrangement. Back to TopVoluntary liquidationA process of liquidation which does not involve the courts or an official receiver. There are two types For solvent companies they would use members’ voluntary liquidation and for insolvent companies, creditors’ voluntary liquidation. Back to TopWinding up orderA legal court order to liquidise a company. This is normally done as a consequence of a creditors petition. Back to Top
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