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As a legal concept, administration is a procedure under the insolvency laws of a number of common law jurisdictions, similar to bankruptcy in the United States.It functions as a rescue mechanism for insolvent entities and allows them to carry on running their business.
It has been suggested that the speaker or writer should either say technical insolvency or actual insolvency in order to always be clear – where technical insolvency is a synonym for balance sheet insolvency, which means that its liabilities are greater than its assets, and actual insolvency is a synonym for the first definition of insolvency ...
Administration in United Kingdom law is the main kind of procedure in UK insolvency law when a company is unable to pay its debts. The management of the company is usually replaced by an insolvency practitioner whose statutory duty is to rescue the company, save the business, or get the best result possible.
The downside of a pre-pack administration is that it can attract negative publicity if the former directors are seen to be shedding liabilities. The Insolvency Service monitors compliance with SIP 16. [7] Its reports show that in 2010 it reported 10 insolvency practitioners to their licensing bodies, and in 2011 it reported 21. [8]
Insolvency is a difficult financial situation, but it doesn’t have to last forever. ... If you’ve reached the point of insolvency — meaning your debts exceed your assets —you may feel like ...
Under the corporate insolvency laws of a number of common law jurisdictions, where a company has been engaged in misconduct or where the assets of the company are thought to be in jeopardy, it is sometimes possible to put a company into provisional liquidation, whereby a liquidator is appointed on an interim basis to safeguard the position of ...
There is also a UK insolvency law which applies across the United Kingdom, since bankruptcy refers only to insolvency of individuals and partnerships. Other procedures, for example administration and liquidation, apply to insolvent companies. However, the term 'bankruptcy' is often used when referring to insolvent companies in the general media.
This would mean that insolvency law should have no requirement that a company should be rescued (unless creditors agree to it) and should have no classes of preferential creditor (except for unlimited security interests). Elizabeth Warren is a US bankruptcy law expert, who advocates the social model of insolvency.