I is for Insolvency

Date published: 13th November 2020

nsolvency

Insolvency is when an individual or organisation cannot pay its bills and debts.

Personal insolvency options in Scotland are:

Bankruptcy

Bankruptcy is a formal method of dealing with debts if other options have failed or are inappropriate. In Scotland, Bankruptcy is sometimes called Sequestration.

There are different criteria for Bankruptcy depending on the amount you owe, your income and if you are a homeowner. You need to have received advice from a Money Adviser before you can apply for Bankruptcy. See our A-Z on Bankruptcy for more information.

Protected Trust Deeds

A Trust Deed is a formal agreement between a debtor and their creditors to repay part, or all of what they owe. It can be voluntary or protected.

A voluntary trust deed is not binding on creditors who can still take Court action against the debtor.

A protected trust deed is binding on all creditors and means they can take no further action to pursue the debt or to make the debtor bankrupt, as long as the debtor complies with the terms of the protected trust deed.

Business insolvency options in Scotland are:

Company Voluntary Arrangements

A Company Voluntary Arrangement allows a financially troubled company to reach a binding agreement with its creditors to pay all, or part of its debts over an agreed period of time.

Administration

Company Administration is directed at rescuing companies as going concerns. Administration can, since the Enterprise Act 2002, be commenced without a court hearing, although a number of formalities must be adhered to and the option of a court hearing still remains. An administrator can be appointed by the company or its directors, the holder of a floating charge or by an administration order of the court.

Receivership

A Receiver is appointed by a lender holding a floating charge over some or all of the company's assets. The main responsibilities of a Receiver are to ensure the appointing lender is paid off. The law recognises that the Receiver's control over the company can have considerable effect on the company and its other creditors.

Liquidation - Winding up

Not all Liquidations are Insolvent Liquidations. They are both designed to achieve the same end result; to collect and distribute the assets of the company. When liquidation comes to an end the company may be dissolved and will no longer exist as a commercial entity.

Our Money Advisers can provide advice and assistance about personal debt and insolvency options. Call us on 0345 1400 094, Monday - Friday, 8.30am – 4pm.

We are unable to provide support and assistance about business debt but you can contact Business Debtline on 0800 197 6026 or online.

 

 

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