Make sense of the technical talk

Keywords for Corporate Recovery roles

Here are some terms relating to the various individual roles that you are likely to come across during a Corporate Recovery procedure:

  • Creditor – An individual who is owed money.

  • Debtor – A person who owes money or who has been made bankrupt.

  • Insolvency Practitioner – An individual authorised by a chartered accountancy body to act as office holder in an insolvency proceeding.

  • Liquidator – The insolvency practitioner who investigates company affairs, reports on director conduct and assesses the assets.
  • Supervisor – The insolvency practitioner who supervises implementation of an IVA or CVA proposal once it has been approved
  • Trustee (deed of arrangement) – An authorised insolvency practitioner dealing with the estate of who entered into the deed.
  • Unsecured Creditor – Any creditor not holding security in respect of their debt.

Corporate Recovery Keywords and explanations

Here are some of the more technical terms that may crop up over the course of a Corporate Recovery procedure for business rescue:

  • Administration – The process under which a company applies to court for its affairs to be taken over by selected licensed insolvency practitioners.
  • Administration Order – An order to arrange and administer an individual’s debt payments or the order for an insolvency practitioner to take control of a company.
  • Company Voluntary Agreement (CVA) – A scheme whereby creditors of a company agree to accept less than 100% of amounts due in full and final settlement of debts.
  • Creditors’ Voluntary Liquidation (CVL) – A process where company creditors ratify the choice of liquidator by shareholders or appoint their own liquidator and elect a liquidation committee.
  • Dividend – Money paid to creditors in proportion to their debt. A 100% dividend means creditors are entitled to statutory interest on the dividend.
  • Financial Restructuring – Reforming and reorganising the debt of a company in order to better fit its plans and goals for the future.
  • Floating Charge – A form of security granted to a creditor over the general assets belonging to a company. Some assets such as stock may change over time.
  • Insolvency – The inability of a company or an individual to pay off debts as and when duely required or where liabilities exceed assets.
  • Insolvency Service – Provides the general framework for dealing with economic financial failure and investigates affairs of individuals, companies and partnerships.
  • Members’ Voluntary Liquidation (MVL) – A solvent liquidation where shareholders appoint a liquidator to realise the assets and settle all company debts within a year.
  • Petition – A written application to the court to start proceedings of a bankruptcy or compulsory liquidation for a business.
  • Pre pack – An arrangement under which the sale of a company’s assets is agreed before administration and concluded shortly after the appointment of administrators.
  • Proof of debt – A document either in the form of a letter or in a prescribed form submitted in an insolvency to establish a creditor’s claim.
  • Proxy – Authority given by a shareholder or creditor to another person to attend a meeting and speak and vote on the shareholder’s or creditor’s behalf. The person is said to be the proxy holder.
  • Restructuring – A term used to describe a reorganisation within a business which may include the complete refinancing of the business in question.
  • Turnaround – A generic term to describe a successful return to trading of a previously under-performing business.
  • Voluntary Liquidation – A procedure where shareholders place a company into liquidation voluntarily without the involvement a court.
  • Winding-up Order – An order of the court for a company to closed down and cease trading through a compulsory liquidation.
  • Winding-up Petition – A written application presented to the court seeking an order that a company be closed down through compulsory liquidation.
  • Wrongful Trading – An action taken against the directors of a company that makes them personally liable for the company losses incurred after the date on which insolvency was proved.

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