s "rescuing the company as a going concern", or if not usually selling the business, and if this is not poss

Administration cases
See also: Administration in United Kingdom law, Administration (law), and Enterprise Act 2002

After the Cork Report in 1982, a major new objective for UK insolvency law became creating a "rescue culture" for business, as well as ensuring transparency, accountability and collectivity.[91] The hallmark of the rescue culture is the administration procedure in the Insolvency Act 1986, Schedule B1 as updated by the Enterprise Act 2002. Under Schedule B1, paragraph 3 sets the primary objective of the administrator as "rescuing the company as a going concern", or if not usually selling the business, and if this is not possible realising the property to distribute to creditors. Once an administrator is appointed, she will replace the directors.[92] Under paragraph 40 all creditors are precluded by a statutory moratorium from bringing enforcement procedures to recover their debts. This even includes a bar on secured creditors taking and or selling assets subject to security, unless they get the court's permission.[93] The moratorium is fundamental to keeping the business' assets in tact and giving the company a "breathing space" for the purpose of a restructure. It also extends to a moratorium on the enforcement of criminal proceedings. So in Environmental Agency v Clark[94] the Court of Appeal held that the Environment Agency needed court approval to bring a prosecution against a polluting company, though in the circumstances leave was granted. Guidance for when leave should be given by the court was elaborated in Re Atlantic Computer Systems plc (No 1).[95] In this case, the company in administration had sublet computers that were owned by a set of banks who wanted to repossess them. Nicholls LJ held leave to collect assets should be given if it would not impede the administration's purpose, but strong weight should be given to the interests of the holder of property rights. Here, the banks were given permission because the costs to the banks were disproportionate to the benefit to the company.[96] The moratorium lasts for one year, but can be extended with the administration.[97]

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Code this kind of debt restructuring is usual, and the so-called "cram down" procedure allows a court to

Because the essential problem of insolvent companies is excessive indebtedness, the Insolvency Act 1986 sections 1 to 7 contain a procedure for companies to ask creditors to reduce the debt they are owed, in the hope that the company may survive. For instance, directors might propose that each creditor accepts 80 per cent of the money owed to each, and to spread repayments out over five years, in return for a commitment to restructure the business' affairs under a new marketing strategy. Under chapter 11 of the US Bankruptcy Code this kind of debt restructuring is usual, and the so-called "cram down" procedure allows a court to approve a plan over the wishes of creditors if they will receive a value equivalent to what they are owed.[86] However, under UK law, the procedure remains predominantly voluntary, except for small companies. A company's directors may instigate a voluntary arrangement with creditors, or if already appointed, an administrator or liquidator can also propose it.[87] Importantly, secured and preferential creditors' entitlements cannot be reduced without their consent.[88] The procedure takes place under the supervision of an insolvency practitioner, to whom the directors will submit a report on the company's finances and a proposal for reducing the debt.

When initially introduced, the CVA procedure was not frequently used because a single creditor could veto the plan, and seek to collect their debts. This changed slightly with the Enterprise Act 2002. Under a new section 1A of the Insolvency Act 1986, small companies may apply for a moratorium on debt collection if it has any two of (1) a turnover under £6.5m (2) under £3.26m on its balance sheet, or (3) fewer than 50 employees.[89] After an arrangement is proposed creditors will have the opportunity to vote on the proposal, and if 75 per cent approve the plan it will bind all creditors.[90] For larger companies, voluntary arrangements remain considerably under-used, particularly given the ability of administrators to be appointed out of court. Still, compared to the individual voluntary arrangement available for people in bankruptcy, company voluntary arrangements are rare.
Administration

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referred insolvency procedure, a company which is insolvent can go under administration. Here a qualified

As a company nears insolvency, UK law provides four main procedures by which the company could potentially be rescued or wound down and its assets distributed. First, a company voluntary arrangement,[82] allows the directors of a company to reach an agreement with creditors to potentially accept less repayment in the hope of avoiding a more costly administration or liquidation procedure and less in returns overall. However, only for small private companies is a statutory moratorium on debt collection by secured creditors available. Second, and since the Enterprise Act 2002 the preferred insolvency procedure, a company which is insolvent can go under administration. Here a qualified insolvency practitioner will replace the board of directors and is charged with a public duty of rescuing the company in the interests of all creditors, rescuing the business through a sale, getting a better result for creditors than immediate liquidation, or if nothing can be done effecting an orderly winding up and distribution of assets. Third, administrative receivership is a procedure available for a fixed list of eight kinds of operation (such as public-private partnerships, utility projects and protected railway companies[83]) where the insolvency practitioner is appointed by the holder of a floating charge that covers a company's whole assets. This stems from common law receivership where the insolvency practitioner's primary duty was owed to the creditor that appointed him. After the Insolvency Act 1986 it was increasingly viewed to be unacceptable that one creditor could manage a company when the interests of her creditor might conflict with those holding unsecured or other debts. Fourth, when none of these procedures is used, the business is wound up and a company's assets are to be broken up and sold off, a liquidator is appointed. All procedures must be overseen by a qualified insolvency practitioner.[84] While liquidation remains the most frequent end for an insolvent company, UK law since the Cork Report has aimed to cultivate a "rescue culture" to save companies that could be viable.
Company voluntary arrangement
See also: Company Voluntary Arrangement and Individual Voluntary Arrangement
In IRC v Wimbledon Football Club Ltd[85] the Court of Appeal held that the objection of the Inland Revenue (then a preferential creditor) would not be an absolute bar to a CVA, after Wimbledon F.C. prevaricated over relocation.

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