The term 'Act of Bankruptcy' refers to actions or behavior indicating that a person or entity might be judged as bankrupt. Such behavior often includes transferring property titles to others with the intent to delay or defraud creditors and admitting bankruptcy.
A bankruptcy petition is a document filed with the bankruptcy clerk's office to formally initiate a bankruptcy proceeding. It specifies the bankruptcy chapter under which the debtor seeks relief and contains comprehensive information about the debtor’s financial status, creditors, assets, liabilities, and recent asset transfers.
Chapter 11, often referred to as reorganization, allows a debtor, typically a corporation or partnership, to remain in business while restructuring its debts under a court-approved plan.
Chapter 7 of the 1978 Bankruptcy Act focuses on liquidation, which involves the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors.
The Common Stock Ratio is a financial metric that represents the percentage of a company's total capitalization that is comprised of common stock. This ratio is significant as it reflects the degree of financial leverage and stability of the company from both creditor and investor perspectives.
A Company Voluntary Arrangement (CVA) is a legally binding agreement between a company and its creditors to restructure debt and avoid liquidation.
In bankruptcy, a cram down refers to the reduction of various classes of debt to a lower amount. It allows a bankruptcy reorganization plan to be confirmed even if some creditor classes vote against it, provided the plan is fair and equitable and does not unfairly discriminate against any dissenting class.
Standards established by creditors that must be satisfied by potential debtors in order for credit to be given, typically reflecting the applicant's ability to repay the loan or make payments for goods or services acquired.
Creditors are individuals or entities to whom an organization or an individual owes money, such as unpaid suppliers of raw materials. Effective management of creditor payments is essential for maintaining credit periods and securing prompt-payment discounts.
Creditors' Voluntary Liquidation (CVL) is the process of winding up a company by a special resolution of its members when the company is insolvent. It involves a meeting with creditors and appointing a liquidator to manage the liquidation process.
A fraudulent conveyance is the deliberate transfer of property to another person with the intention of putting it beyond the reach of creditors. Legal scrutiny under statutes like the Insolvency Act 1986 can result in such transactions being set aside by the court.
Fraudulent trading refers to the act of carrying on a business with the intent to defraud creditors or for any other fraudulent purpose. This includes accepting money from customers when the company is unable to pay its debts and meet its obligations under the contract. Such conduct is a criminal offence.
Denoting the position of a company lacking sufficient cash, or assets that can be quickly converted into cash, to meet the demands of creditors.
An Individual Voluntary Arrangement (IVA) is a formal, legally-binding agreement between an individual and their creditors to pay off debts over a set period, usually managed by an insolvency practitioner.
Inability to pay one's debts when they fall due, which may lead to bankruptcy for individuals or liquidation for companies.
An interpleader is an equitable action initiated by a debtor who seeks court intervention to determine to whom a particular debt is owed among multiple claimants, without making a claim on the disputed property themselves.
Involuntary bankruptcy occurs when creditors force a debtor into bankruptcy proceedings, typically under Chapter 7 or Chapter 11 of the U.S. Bankruptcy Code.
Judgment proof refers to individuals from whom a creditor cannot collect money, even if there is a court order stating that a debt is owed. This status typically applies to people who are insolvent or whose wages or assets are protected by state law.
A lienholder is an individual or entity that has a lien on a particular piece of property or asset, essentially providing them with a right to keep possession of it until a debt owed by the owner is discharged.
Liquidation, also known as winding-up, refers to the process of distributing a company's assets among its creditors and members, which ultimately leads to the dissolution of the company. The process can be voluntary or court-ordered.
A person appointed to manage the winding-up process of a company, ensuring orderly asset distribution to creditors and members.
A Loan Creditor is an individual or institution that provides financing to a business or individual, thereby becoming entitled to repayment of the principal amount along with interest.
A covenant in a loan agreement where the borrower promises that the loan in question will rank equally with its other defined debts, ensuring no preferential treatment among creditors.
Personal accounts are used to record transactions with individuals or entities, such as debtors and creditors. These accounts are essential for managing relations and obligations with people and organizations.
A legal document filed by an insolvent debtor to declare bankruptcy and seek protection from creditors.
Preference occurs when an insolvent debtor favours a particular creditor, such as by paying one creditor in full, to the disadvantage of other creditors. If the debtor becomes bankrupt or goes into insolvent liquidation, the court can order restoration to ensure equitable treatment among all creditors.
A creditor whose debt is prioritized over other creditors’ debt, increasing their likelihood of payment in full during a bankruptcy or company winding-up procedure.
Prepackaged bankruptcy under Chapter 11 involves a pre-negotiated agreement between creditors and the debtor regarding the terms of reorganization before filing for bankruptcy.
Recontracting is the renegotiation of contracts between a company in financial distress and its creditors to establish more favorable terms.
A Scheme of Arrangement is an agreement between a company and its members or creditors to restructure the business or debts, often used during financial difficulties or takeovers and requires court sanction.
A comprehensive document that outlines a debtor's assets, liabilities, and creditor details in the context of bankruptcy proceedings, essential for assessing financial status during insolvency.
An encumbrance placed upon property as a claim for payment of a tax liability.
A trustee in bankruptcy is an individual or entity appointed to manage the property and financial affairs of a bankrupt individual or entity. The trustee's responsibilities include collecting and liquidating assets, distributing the proceeds to creditors, and ensuring that the bankruptcy process is conducted in accordance with applicable laws.
An unsecured creditor is an entity to whom money is owed by an organization but does not have any specific collateral or asset to lay claim on in the event of bankruptcy or non-payment.
A detailed examination of Company Voluntary Arrangements (CVA) and Individual Voluntary Arrangements (IVA) as defined under the Insolvency Act 1986, including their objectives, processes, and key differences.
The process of liquidating a corporation, involving the collection of assets, payment of expenses, satisfaction of creditors' claims, and distribution of remaining assets to shareholders.
Winding-up is the process of dissolving a company by liquidating its assets to pay off creditors and distributing any remaining assets to shareholders.
Working Capital Adjustment, specifically the term 'monetary working-capital adjustment', refers to the modifications done to the working capital of a business under current-cost accounting. It accounts for fluctuations in bank balances, overdrafts, and cash required to support daily operations.
