UK insolvency law
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UK insolvency law deals with the insolvency of firms in the United Kingdom.
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[edit] Company law
In the United Kingdom, it is a criminal offence to trade whilst insolvent. However, there are insolvency practices ("Administrators") which aim to protect the creditors of the insolvent individual or company and balance their respective interests. Alternatives such as Company Voluntary Arrangements and Administration in the UK reflect this shift towards a rescue culture, a term popularised through the Cork Committee (1984).
When determining whether a gift or a payment to a creditor is an unlawful preference, both the date of the insolvency and the date of the bankruptcy – the liquidator or administrator will be able to recover money paid to a creditor as a preference if paid within six months (or two years if the creditor is a person connected to the company) preceding the date of liquidation and the company was insolvent at the time. In addition to unlawful preferences, liquidators and administrators in the UK may also challenge transactions at an undervalue, extortionate credit transactions, some floating charges and transactions defrauding creditors.
In the UK, the term bankruptcy is reserved for individuals; a company which is insolvent may be put into liquidation (sometimes referred to as winding-up).
- Insolvency Act 1986, as amended by the Enterprise Act 2002
- Liquidation
- Administration order, by the court in order to effect a rescue of the company
- Administrative receivership and receivership, initiated by floating charge holders.
- Creditor, Secured creditor, Unsecured creditor, Preferential creditor
- Trading while insolvent (UK)
- Wrongful trading, s.214 IA 1986, Fraudulent trading, s.213 IA 1986,
- Undervalue transaction
[edit] Labour law
There are a number of provisions which deal with employees' rights upon insolvency, influenced by European Union law's harmonisation measures.
- EC Directive 80/987/EEC, amended by...
- EC Directive 2002/74/EC (read this one)
- Employment Rights Act 1996 ss.166-170 and 182-190, which allows compensation for up to £270 per week in the event of an employer going insolvent and not being able to pay outstanding wages.
- C-125/97 Regeling v. Bestur Van de Bedrifsvereiniging Voor de Metallnijverheid [1999] IRLR 379
- C-278/05 Robins v. Secretary of State for Work and Pensions [2007] IRLR 270
[edit] See also
- Transfer of Undertakings (Protection of Employment) Regulations 2006
- Enterprise Act 2002
- Wrongful trading (s.214 Insolvency Act 1986)
- UK company law
[edit] Notes
[edit] External links
- UK Government Insolvency Service
- Insolvencies in Europe - Consequences on bad-debt write-off rate in Europe (26 countries)
- The Cork Committee, Report of the Review Committee on Insolvency Law and Practice, Cmnd 8558 (1982). This report was followed by a White Paper in 1984, A Revised Framework for Insolvency Law, Cmnd 9175 (1984), and these led to the Insolvency Act 1986.
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