With COVID-19 causing ever increasing financial uncertainty around the globe, we thought it an apt time to provide you with a summary of the various corporate insolvency procedures in the UK applicable to companies facing financial difficulties. Taking each in turn, we will discuss administration, administrative receivership, company voluntary arrangements, schemes of arrangement and liquidation. We will also touch briefly on directors’ duties, rules relating to asset distribution on insolvency and transactions that may be set aside on insolvency or ‘reviewable’ transactions.

With COVID-19 causing ever increasing financial uncertainty around the globe, we thought it an apt time to provide you with a summary of the various corporate insolvency procedures in the UK applicable to companies facing financial difficulties. Taking each in turn, we will discuss administration, administrative receivership, company voluntary arrangements, schemes of arrangement and liquidation. We will also touch briefly on directors’ duties, rules relating to asset distribution on insolvency and transactions that may be set aside on insolvency or ‘reviewable’ transactions.

A. THE PROBLEM

Many charities and associations have cash flow challenges, particularly in the current economic situation. They usually budget to break even financially. If some funding does not materialize as expected, they may be forced to close down. Their directors may be at financial risk as a result.