Insolvency Act 1986

The Insolvency Act 1986 (c. 45) is an act of the Parliament of the United Kingdom that provides the legal platform for all matters relating to personal and corporate insolvency in the UK.

The Insolvency Act 1986 followed the publication and most of the findings in the Cork Report, including the introduction of the Individual Voluntary Arrangement (IVA) and Company Voluntary Arrangement (CVA) procedures. Elements of the Act were updated by the Enterprise Act 2002, which came into effect on 1 April 2004 and introduced amongst other things the popular "out of court" administration route, and the allocation of a limited amount of funding released from assets, known as the "prescribed part", which could be made available to support ordinary unsecured creditors ahead of secured creditors. This limit was initially £600,000, but it was increased to £800,000 by the Insolvency Act 1986 (Prescribed Part) (Amendment) Order 2020 (SI 211/2020) on 6 April 2020 to maintain the real value of the limit. Those considering the main Act should also refer to the Insolvency Rules 1986 and numerous Regulations and other amending legislation since 1986, and also to the best practice which applies to the administration of formal insolvency matters set out in the Statements of Insolvency Practice (SIPs) approved by the insolvency practitioner authorising bodies. Further updates to the Act were made by the Corporate Insolvency and Governance Act 2020, which provided a moratorium for companies that were likely to become insolvent and gave additional reliefs for businesses that were adversely impacted by the COVID 19 pandemic.

The Insolvency Act 1986 essentially governs issues relating to personal bankruptcy and Individual Voluntary Arrangements and all administrative orders relating to company insolvency.

Schedule B1, on the new administration procedure after the Enterprise Act 2002.