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Scope of insolvencies and administrations

D6.701 Insolvency (liquidation, administration, receivership)—overview

An 'insolvency' arises if a company does not have sufficient assets to cover its liabilities or if it cannot pay its debts when they fall due.

A company which is insolvent requires the expertise of an insolvency practitioner, which includes administrators, receivers and liquidators. Furthermore the term insolvency covers sequestration, liquidation, administrative receivership and receivership; in these situations the primary aim will be to achieve the maximum realisation of the company's assets for its creditors. Some liquidations, such as a compulsory winding up, may form part of a restructuring of a company or group of companies.

There is very little tax legislation dealing specifically with insolvency and administrations. What there is tends to deal with the compliance side (for example, providing when an accounting period will begin or