DR - Insolvency

Question 1

What is the minimum debt that insolvency proceedings can be brought against an individual?

Answer 1

£5,000

Question 2

What is the minimum debt that insolvency proceedings can be brought against an company?

Answer 2

£750

Question 3

What is the process for insolvency?

Answer 3

Once the petition is issued, it is served on the judgment debtor.

The court fixes a time for the hearing of the petition and the debtor will therefore be notified of a date to attend a court hearing to decide whether a bankruptcy order or winding-up order should be made against them.

Question 4

What happens if the debtor does not turn up for an insolvency hearing

Answer 4

order will very likely be made.

Question 5

What happens following an insolvency order?

Answer 5

The debtor’s assets will be distributed to their creditors according to very specific rules setting out the order of preference of particular types of creditor (eg employees, secured creditors, unsecured creditors and so on.)

Question 6

What is a statutory demand?

Answer 6

A precursor to insolvency proceedings being commenced a demand in a standard form.

Question 7

What is the relevant period in a statutory demand?

Answer 7

21 days after service of the demand

Question 8

What happens if payment has not been made by the expiry of the relevant period in the statutory demand?

Answer 8

So long as the debt remains unpaid for a period of 21 days after service of the demand, the debtor is at risk of the court presuming that he/it is unable to pay its debts and is therefore insolvent.