Glossary

Glossary of UK insolvency terms for accountants

Statutory references, antecedent-transaction terminology, and the practical concepts an introducing accountant needs to navigate the Insolnet workflow. Each term is anchored at a stable URL fragment so it can be cited directly.

Audience: UK practising accountants in general practice | Jurisdiction: England & Wales | Published: May 2026 · Updated: May 2026

Antecedent transactions

An umbrella term for transactions entered into by a company before liquidation that a liquidator can challenge under the Insolvency Act 1986. Includes preferences (s.239), transactions at undervalue (s.238), transactions defrauding creditors (s.423), and avoidance of floating charges (s.245). Antecedent-transaction review is the core forensic work the Bank Analysis automates.

Armalytix

A UK regulated open-banking integration provider that Insolnet uses (integration in development) to ingest bank-account data directly from the company's bank under read-only consent. The alternative ingest route, available today, is CSV upload of bank statements.

Bank Analysis

The pre-appointment forensic review of a company's bank-account record run on Insolnet. Combines open-banking ingest (or CSV upload), a deterministic categoriser seeded with Companies House appointments and known counterparties, and Anthropic Claude Opus 4.7 for the IP-specific findings review. Produces a severity-graded report in minutes covering preferences, transactions at undervalue, overdrawn DLAs, unlawful dividends, misfeasance signals and phoenix-prep patterns.

BTI v Sequana

BTI 2014 LLC v Sequana SA [2022] UKSC 25 — the Supreme Court decision restating when a director's duty under CA06 s.172(3) to consider creditor interests engages: when the directors know, or should know, that the company is insolvent, bordering on insolvency, or that insolvent liquidation or administration is probable. The duty intensifies as the prospect approaches inevitability.

Case set-up fee

The professional services fee paid by Insolvency Direct to an introducing accountant who has taken on the questionnaire completion, document gathering and KYC work that Insolvency Direct would otherwise do. Paid on appointment of the liquidator. Not a referral commission; a fee for the work performed.

Connected party (IA86 s.249)

Defined in section 249 of the Insolvency Act 1986. Broadly includes directors of the company, their families, and companies controlled by them. The look-back window under sections 238 and 239 is extended (to two years) where the counterparty is connected; the company's insolvency at the time is presumed; and the "desire" to prefer under s.239 is presumed.

Creditors Hub

The public-facing portal where creditors of an Insolvency Direct case register, file claims, vote on resolutions, and view documents. Removes the paper-shuffling from a traditional CVL.

Creditors Voluntary Liquidation (CVL)

The voluntary liquidation procedure for an insolvent UK company. The directors and shareholders pass the resolution to wind up; the creditors hold a decision procedure to appoint the liquidator. The liquidator then realises assets, investigates conduct, files a CDDA s.7A report and distributes any funds available.

Director's loan account (DLA)

The running balance between a director and the company representing amounts owed in either direction. Overdrawn (the director owes the company) is the common pre-insolvency position and a leading cause of personal exposure on liquidation, since the liquidator has a statutory duty to recover it.

Director disqualification (CDDA)

Under section 6 of the Company Directors Disqualification Act 1986, the court must disqualify a director of an insolvent company whose conduct makes them unfit to be concerned in company management. Disqualification ranges from 2 to 15 years. Gateway is the IP's CDDA s.7A confidential report on conduct. Following disqualification, a compensation order under s.15A may also be sought.

Fraudulent trading (IA86 s.213)

Civil liability under section 213 of the Insolvency Act 1986 where business has been carried on with intent to defraud creditors. A high-threshold provision requiring actual dishonesty; carries a parallel criminal offence under CA06 s.993 with a maximum 10-year custodial sentence. Not limited to directors — advisers who knowingly assist are within reach.

Misfeasance (IA86 s.212)

A summary procedure by which the liquidator can bring claims for breach of fiduciary or other duty against any person who has been involved in the management of the company. The workhorse provision for unlawful dividends, undocumented bonuses, undervalued asset transfers, and similar breaches. Catches accountants found to have acted as de facto or shadow directors.

Members Voluntary Liquidation (MVL)

The solvent liquidation procedure for a UK company. Directors swear a Declaration of Solvency, shareholders pass the resolution to wind up. The liquidator pays creditors in full with statutory interest and distributes any surplus to shareholders. Typically tax-driven (BADR / accumulated profits extraction / s.110 reorganisation).

Onset of insolvency

The point from which the antecedent-transaction look-back clock runs under IA86 s.240. For a CVL, the date of the resolution to wind up. For a compulsory liquidation, the date of the petition. For an administration, the filing of the notice of intention to appoint, or the appointment date where there is no notice.

Open banking

A regulated UK framework for consent-based, read-only third-party access to a company's bank-account data, returned as structured machine-readable transaction records. Insolnet uses Armalytix as the open-banking integration layer (currently in development).

Phoenix activity

The transfer of a company's trade, customers, plant or goodwill to a successor entity, typically incorporated by the same directors. Not unlawful in itself, but transfers at undervalue are challengeable under IA86 s.238 (two-year look-back) or s.423 (no look-back), and IA86 s.216 restricts re-use of the same or similar company name for five years.

Preference (IA86 s.239)

Something the company does (typically a payment) that puts a creditor (including a guarantor) in a better position than they would have been in had the company gone into insolvent liquidation, where the company was influenced by a desire to produce that result. Look-back: 6 months for unconnected creditors, 2 years for connected. For connected parties the desire is presumed.

Suspicious Activity Report (SAR)

A report to the National Crime Agency under section 330 of the Proceeds of Crime Act 2002. UK accountants and tax advisers are in the regulated sector under the Money Laundering Regulations 2017 and have a duty to file a SAR where they know, suspect or have reasonable grounds to suspect money laundering. Tipping-off offence under POCA s.333A: the client cannot be told a SAR has been filed.

Section 110 reorganisation

A use of MVL machinery under section 110 of the Insolvency Act 1986 to demerge a company into two or more successor entities. Typically tax-driven (separating a trading business from a property holding subsidiary; splitting two unrelated trades before sale). Usually requires HMRC advance clearance.

Shadow / de facto director

A "shadow director" (IA86 s.251 / CA06 s.251) is a person in accordance with whose directions or instructions the directors of a company are accustomed to act. A "de facto director" is a person who, although not formally appointed, undertakes the role of director in substance. Both engage the full set of director duties and liabilities. An accountant who routinely makes the financial decisions for an owner-managed client is at material risk of being treated as either.

SIP 9 fee disclosure

Statement of Insolvency Practice 9. Requires the IP to disclose proposed fees and the basis of charging to creditors and members, in a prescribed format, before fees are approved. Forms part of the case appointment documentation Insolnet generates automatically.

Transaction at undervalue (IA86 s.238)

A transaction in which the company makes a gift or receives consideration significantly less than the value of what it provides. Look-back: 2 years from the onset of insolvency. The company's insolvency at the time is presumed where the counterparty is connected. Narrow defence where the transaction was in good faith, for the purpose of carrying on the business, and in the reasonable belief it would benefit the company.

Unlawful dividend (CA06 s.847)

A distribution paid in absence of distributable reserves at the date of declaration is unlawful (CA06 Part 23). Section 847 makes the recipient (where they knew or had reasonable grounds for believing it was unlawful) liable to repay. Re Marini Ltd [2004] BCC 172 establishes directors carry the burden of proving the dividend was justified at the moment of declaration.

Wrongful trading (IA86 s.214)

Personal liability for a director who continued to trade beyond the point at which they knew, or ought to have concluded, there was no reasonable prospect of avoiding insolvent liquidation. The "moment of truth" is the threshold (Re Produce Marketing Consortium Ltd (No 2) [1989] BCLC 520). From that moment a director must take every step a reasonably diligent director would take to minimise loss to creditors.

Zone of insolvency

The period in which the director's duty to consider creditors' interests under CA06 s.172(3) is engaged. The Supreme Court in BTI v Sequana [2022] UKSC 25 confirmed this engages when the directors know or should know the company is insolvent, bordering on insolvency, or that insolvent liquidation or administration is probable.