Bankruptcy and insolvency

Question 1

What is bankruptcy ?

Answer 1

This relates to a sole trader or individual who Cannot pay
their debts

Question 2

What is bankruptcy ?

Answer 2

This relates to a sole trader or individual who Cannot pay
their debts

Question 3

What is an insolvency ?

Answer 3

This relates to the company who cannot pay its debts

Question 4

How much do you need to owe for bankruptcy?

Answer 4

£5000 or more

Question 5

What is the correct order of distribution of assets if a
bankruptcy under is issued

Answer 5

1) Secured ceditors
2) Bankruptcy costs
3) Preferential creditors
4) Unsecured creditors
5) Deferred Creditors
6) The bankrupt

Question 6

Procedure for Bankruptcy or Compulsary liquidation

Answer 6

1) The debt has to be £ 750 or more ( £5000 or more for
bankruptcy) for me insolvency process to take place
2) The customer is sent an official form detailing the
amount Owing. This is a statutory demand
3) If the payment is not received the court is petitioned
by a creditor
4) A Bankruptcy Order or Winding up order ( liquidation) is
issued by the Court. Any other legal proceedings relating
to the receivables property or debts are suspended
5)An Official Receiver is appointed. The official receiver takes
controlof the assets of the business and a statement of
the assets and liabilities is drawn up -this is known as a statement of affairs
6)The officialreceiver summons a creditors meetingwithin
12 weeks of the bankruptcy Order and may hand over to an
Insolvency Practioner
7)Assets are sold
8)Distributionsare made according to the a strict priority:
- Fixed Charge holdersare paid first
- Fees and charges of the bankruptcy or liquidation process
- preferential Creditors
- Floating charge holders ( companies only)
- Unsecured creditors
- The bankrupt or company shareholders