Types of insolvency
What is insolvency?
Where an individual or a company is facing financial difficulty and is unable to meet its debts as they fall due, the individual/company is described as being insolvent. The insolvent party is referred to as the debtor. A number of insolvency procedures are available to allow the debtor's affairs to be managed in an orderly manner. As insolvency has serious consequences it should only be considered as an option of last resort. All types of insolvency procedures are governed by legislation. There are differences between legislation applicable in Scotland to legislation in the rest of the UK.
How is ICAS involved in insolvency?
As a recognised professional body (RPB), ICAS is authorised to issue and renew insolvency licences and to withdraw them from its members or affiliates. The performance of insolvency practitioners licensed by ICAS is regularly monitored. The Institute also seeks to influence new legislation and best practice by being involved in their development and by lobbying both the Scottish and the UK Governments.
Personal and Corporate Insolvency
Help is available for individuals and companies facing financial difficulty. For more detailed information you can speak to an insolvency practitioner, or contact a money advisor. Local money advisers can be found at Money Advice Scotland, Citizens' Advice Scotland or Step Change.
Personal Insolvency
The Scottish Government has issued information to help individuals in debt. If a creditor (someone to whom you owe money) is taking steps to recover the money you owe through a court or legal process or if they intend to petition for your sequestration (bankruptcy) they must, by law, provide you with a copy of the Debt Advice and Information Package (DAIP). The Debt Advice and Information Package is available here.
Further information about debt and bankruptcy can be found on the Accountant in Bankruptcy website:
Other support is available from Money Advice Scotland.
Details about different types of personal insolvency can be found here.
Corporate Insolvency
If you are a director of a company which is facing financial difficulty, or you act for such a company, you should seek professional advice at the earliest opportunity as it may be possible to take steps to avoid formal insolvency. You can contact an insolvency practitioner by accessing the above link 'Find an Insolvency Practitioner'.
Pre Packaged Administrations
Information and advice on Pre Packaged Administrations can be found here.