An insolvency proceeding can be defined as a formal procedure facilitated by an insolvency practitioner (IP) with the goal of either saving a business or putting it to an end in the most effective and equitable manner possible.
A ‘relevant’ insolvency proceeding is one that is carried out with the intention of facilitating a recovery so that the business can emerge and operate as a going concern. Therefore, any insolvency procedure that does not provide a chance of recovery is not considered a relevant proceeding.
Be careful when taking advice that you are actually speaking to a qualified insolvency practitioner and not a broker or middleman who may look to charge unnecessary upfront fees.
Many directors are confused as to why it is called a “relevant” proceeding, but the answer is rather straightforward -- Any proceeding that is going to inevitably result in the end of a company is considered irrelevant with respect to regulations (i.e. – TUPE) because there will be nothing left of the company to regulate once the proceeding is finished.
According to the Department for Business, Enterprise and Regulatory Reform (DBERR), the following are considered relevant insolvency proceedings:
Company Administration –An IP is appointed as the administrator of the company and given full control over management with the aim of recovery. The administrator assumes the role of temporary chief executive officer (CEO) and can use a number of methods to raise funds and facilitate a business rescue. Once an administration order is granted by the Court no creditors can take legal action against you for as long as the order is in effect.
The following are NOT considered relevant insolvency proceedings:
If you’d like to examine your recovery options and work towards a business rescue via a relevant insolvency proceeding we can help. Likewise, if you’re simply trying to bring your company to an end without hassle we can make sure everything goes smoothly. Send us an email or call us on 0800 644 6080 for free director support and advice.