Corporate Insolvency

Corporate Insolvency is a situation in which you find yourself in a condition that you are no longer able to pay the debts as they are due. Many options are available to combat insolvency. You can negotiate with the creditors ensuring them problem will be resolved in short time. As short term solution debt management is the best option to control creditors. Unsecured creditors can get repay with individual voluntary arrangement. Bankruptcy is possibly most obvious solution in which all assets of company is sold for benefits of creditors.

Possible forms of Corporate insolvency are:

1. Bankruptcy: is a process often started by court to distribute all assets of Corporateized insolvent among the creditors. Insolvent individual can appeal for bankruptcy which may lasts for one year. However, creditors can also demand for bankruptcy against an insolvent.

2. Debt relief orders (DROs): This order will obstruct creditors from compelling their debts from insolvent individual for about a year. After one year they are free from liabilities of the debts. Also there is a Debt Management Plan which consists of an agreement between creditors and insolvent individual that within certain period of time they will be paid what they owe.

3. Individual Voluntary Arrangements (IVAs): Individual Voluntary Arrangement is one type of agreement between individual and creditors that either they compromise their debts or prepare plan to settle. An insolvent individual can offer IVA to creditors.

Terms of Insolvency

1. Administration order: An order issued by a court for the company that it recruits administrator to manage the company.

2. Administrative receiver: An IP hired by bond holders. The IP’s duties are to realize all assets of bondholders.

3. Administrative receivership: A process of appointing new insolvency practitioner which will realize the company’s assets and also will pay the debt of debenture holders.

Insolvency scheme can be of two types: Corporatized Insolvency and Corporate Insolvency.