Administration

When a company is facing financial difficulties it can be placed into administration. This means that, during the period for which it is in administration, the affairs, business and property of the company will be managed by a person ('the administrator') appointed for that purpose. The Administrator must be a Licensed Insolvency Practitioner.

Voluntary Arrangement

Essentially advising and drawing up a full or partial repayment agreement with creditors.

Receivership

When a company breaches the terms of its borrowing from a creditor with a floating charge, or in other circumstances set out in the charge, that creditor may appoint an Administrative Receiver (who must be a Licensed Insolvency Practitioner) to recover the money it is owed. Many companies give such a charge to banks as security for their borrowing. Administrative receivership is often referred to simply as "receivership".

Voluntary Liquidation

This occurs where the shareholders, usually at the directors' request, decide to put a company into liquidation because it is insolvent. Either the company cannot pay its debts as they fall due or it has more liabilities than assets.

The purpose of the liquidation is to appoint a responsible person who has a duty to collect the company's assets and distribute them to its creditors in accordance with the law. That person is the Liquidator, who must be a Licensed Insolvency Practitioner.

Compulsory Liquidation

A compulsory liquidation occurs when a company is wound up by an Order of the Court. The purpose of the winding-up order is to collect the company's assets and distribute them to its creditors in accordance with the law.