Insolvency FAQs

Insolvency is a term used to describe when a business (or individual) cannot pay its debts as they fall due or has insufficient assets to cover its liabilities. People or businesses who are owed money, referred to as creditors, can instruct specialist insolvency lawyers to assist them in these circumstances.

The process is started by the filing of a petition by one of its creditors or the insolvent party. An insolvency practitioner will be appointed to gather in the assets and distribute available funds to creditors, The insolvency practitioner may perform other functions too, like investigating any wrongful activity that may have taken place prior to the insolvency. Sometimes the debtor will pay the petition debt to avoid either bankruptcy or liquidation.

Bankruptcy is a legal process that may take place when an individual cannot pay his/her debts.

When an individual is declared bankrupt the Official Receiver or an insolvency practitioner known as a Trustee in Bankruptcy will assess and gather in the assets of the insolvent  individual and use them to pay the debts to the creditors.Creditors may receive only some, or in some cases none of the money owed, dependent on assets available.