What happens when a company cannot pay its debts — the procedures, the order in which creditors are paid, and the personal exposure of those who ran it.
Insolvency law has to balance rescuing viable businesses against protecting creditors, and every procedure in this chapter sits somewhere on that spectrum. It begins with the statutory tests for inability to pay debts and the statutory demand, then moves to administration — its objectives, the moratorium, appointment routes and the controls on pre-pack sales — before covering the rescue tools: the CVA, the Part A1 moratorium and the Part 26A restructuring plan with its cross-class cram-down. From there it turns to liquidation in its compulsory and voluntary forms, the statutory order of priority, the prescribed part and insolvency set-off. It closes with the office-holder's powers to unwind antecedent transactions — undervalues, preferences, invalid floating charges and transactions defrauding creditors — and the routes to personal liability and disqualification for directors of a failed company.
