Each week we are seeing stories in the news about construction companies becoming “insolvent”, going into “liquidation” or having “administrators” appointed. But what do these terms mean? Insolvency is a complex area of law with its own terminology, so we’ve broken down what all the terms mean below.
What is insolvency and what happens to a company when it is insolvent?
The main piece of legislation that governs insolvency in the UK the Insolvency Act 1986 does not actually define insolvency. From a legal perspective, companies are legal persons. They’re effectively born (when they’re “incorporated”) and they also cease to exist (when they’re “dissolved”). Somewhere in this legal life, they may experience financial distress and bec…
Read the full article at: https://www.womblebonddickinson.com/uk/insights/articles-and-briefings/rebuild-guide-insolvency-terminology