Overview of insolvency

[eteb3]

Hi all

I'm looking at understanding insolvency processes from the intelligent layman's point of view.

Are there any standard books I can get to help?

When I read up on law, I find first-year-undergrad or revision resources are helpful. Any comparable recommendations on insolvency would be very welcome.

Thank you,

eteb3

 

[ChrisCallaghan]

I suppose it depends how basic to intermediate an understanding you wish to have. Most insolvency practices' websites contain pages with useful summaries of the main processes. @Lisa Thomas has also put together some very good YouTube videos that help give a good grounding.

If you're looking for a more detailed understanding, you might want to shop about for 2nd hand CPI or CII course books, or consider signing up for those courses.

Can I ask what's prompted your interest in learning more about insolvency?

 

[eteb3]

Thanks, that's all v helpful.

Can I ask what's prompted your interest in learning more about insolvency?

This is a long, slow project that arguably isn't going anywhere, but we're still plugging away. Our charity needs a venue. We want to do it as a partnership with investors (who don't want the max value possible, just some kind of a return, but must be equity not debt).

There's all manner of restrictions to navigate with respect to sale of shares, FSMA more generally, etc, etc.

Obviously all matters for professional advice, but we're bootstrapping it as much as we possibly can. The advice we have been able to get has tended to be box-standard, but we need to be using unusual structures (unlimited company, eg) so actually not that hard to be more knowledgable on the quirks than professionals are - and essential to get the best out of them.

Knowing the insolvency process is v important. eg, almost everyone says "debenture holders can appoint an administrator", but we need to know that is absolutely correct. In fact it seems that right is only for holders of a secured debenture, which must be secured by a floating charge, and a qualifying floating charge at that?

I want to get on top of other such details.

Thanks for your thoughts: they're useful.

 

[Ian J]

Knowing the insolvency process is v important. eg, almost everyone says "debenture holders can appoint an administrator", but we need to know that is absolutely correct. In fact it seems that right is only for holders of a secured debenture, which must be secured by a floating charge, and a qualifying floating charge at that?

Debentures can also be fixed charges as well as floating and most charges levied by financial institutions are a mixture of both since the Brumark ruling.

In any event if you are talking about a specific charge why not read the document to see if it gives the right of appointment of an administrator - it probably will

 

[ChrisCallaghan]

Totally agree with what @Ian J has said here. Rather than trying to get your head around the ins and outs of everything relating to insolvency, much easier to take any security docs to a solicitor, preferably one with insolvency experience, before signing.

 

[eteb3]

Thanks, both. Sage advice if someone had proposed a contract to us.

At this stage we're trying to work out what security we can offer our "investors". Some won't be earning profit (or interest), so they'll want something safe and secure. Ofc, need professional advice at some point. Just trying to canvass the menu of options atm.

read the document to see if it gives the right of appointment of an administrator - it probably will

How does this work, if the debenture in question is not secured by a "qualifying floating charge"?

Does a fixed-charge creditor apply to the court for the court to appoint, while a qualifying floating-charge creditor can appoint an administrator themselves?

Or can the debenture specify that if XYZ happens, the holder can require the company to appoint an administrator of their own choosing? (That would seem sensible.)

Context: I see only three ways to appoint an administrator, and holders of fixed charges don't get mentioned.

 

[Ian J]

Context: I see only three ways to appoint an administrator, and holders of fixed charges don't get mentioned.

The sort of fixed charge that you are thinking of is for example where a finance company is financing plant or equipment and they probably won't have the right to appoint an administrator but most banks and financial institutions who require security will take a charge over the assets comprising a fixed and floating charge which (for example again) will comprise a fixed charge over plant, equipment and unencumbered buildings plus a floating charge over stock and book debts

 

[Lisa Thomas]

I suppose it depends how basic to intermediate an understanding you wish to have. Most insolvency practices' websites contain pages with useful summaries of the main processes. @Lisa Thomas has also put together some very good YouTube videos that help give a good grounding.

If you're looking for a more detailed understanding, you might want to shop about for 2nd hand CPI or CII course books, or consider signing up for those courses.

Can I ask what's prompted your interest in learning more about insolvency?

Thanks for the mention, Chris.

 

[ChrisCallaghan]

Thanks for the mention, Chris.

You're very welcome. They're good videos!