A guide for businesses or individuals who have lost money in an insolvency

What is insolvency?

Insolvency is where an individual or company cannot pay the debts they owe when they are due and/or the individual or company owes more than they own. People or companies in this situation can end up in a formal insolvency procedure (‘an insolvency’). Formal insolvency procedures are legal procedures designed to get debts repaid and to return individuals and, where possible, businesses to financial health.

Insolvency can be a difficult and stressful situation for everyone involved – whether it’s the insolvent company or individual (the debtor) or the individuals and companies who face the possibility of having their debts go unpaid, the creditors.

What's in this guide?

This guide to insolvency is designed to help creditors negotiate what can often be a complicated process which can sometimes seem time-consuming or confusing. The guide has been written for the sole traders or small companies who are unlikely to be exposed to insolvent debtors on a regular basis, usually known in the insolvency process as unsecured creditors. These are creditors who are owed money by a business or individual, but who do not have security (charge or mortgage) to protect what they are owed.

The guide explains the terms you might come across and the insolvency procedures you are likely to be involved in.  Also included is advice on how to engage in the process including how to see misbehaving directors or debtors brought to justice, and how to agree a fair fee with an insolvency practitioner (a licensed independent specialist) for the work they will be doing.

Where we can, we’ve tried to avoid technical language, but sometimes this isn’t possible.  There is a glossary of many of the relevant terms which have been used in this guide.

The nature of insolvency means it isn’t always possible to get any or all the money you are owed back. However, the more you understand about insolvency, the easier it is to get involved.


We’ve summarised the key steps in the insolvency processes for you to make sure you’ve done everything that you need to and for you to see what you can expect from the insolvency practitioner or Official Receiver (England and Wales). For insolvency procedures in England and Wales please see here. Helpsheets will be available for procedures in Scotland following the introduction of the new insolvency rules in 2019.  In the meantime, please see here.

This website has been produced by R3. 

About R3


R3 is the trade association for the UK’s insolvency, restructuring, advisory, and turnaround professionals. We represent insolvency practitioners, lawyers, turnaround and restructuring experts, students, and others in the profession.

Our Full Members are qualified, regulated and work across the spectrum of the profession, from the global legal and accountancy firms through to smaller, local practices.

The insolvency, restructuring and turnaround profession is a vital part of the UK economy. The profession rescues businesses and jobs, creates the confidence to trade and lend by returning money fairly to creditors after insolvencies, investigates and disrupts fraud, and helps indebted individuals get back on their feet.

The UK is an international centre for insolvency and restructuring work and our insolvency and restructuring framework is rated as one of the best in the world by the World Bank. R3 supports the profession in making sure that this remains the case.

R3’s work includes:

  • Technical support for members
  • Education, training and networking opportunities
  • Public affairs, press and policy work
  • Support for all practice sizes, including dedicated smaller practice support
  • Marketing and advertising opportunities
  • Guidance for businesses and individuals

This website is part of our objective to promote best practice in the UK insolvency regime – making sure the insolvency process is fair and transparent for all those involved.

A few facts about UK insolvency and restructuring

In 2016 there were just over 100,000 new insolvency cases across the UK – so if you are owed unpaid debts you’re not alone. As mentioned earlier, The World Bank ranks our insolvency and restructuring framework as one of the best in the world, returning more money to creditors, faster and more cheaply, than the insolvency frameworks in the US, France and Germany.

You may also be interested to know that, in 2013-14, our profession:

  • Rescued 41% of the insolvent businesses with which it worked;
  • Helped save 230,000 jobs;
  • Advised 135,000 people about their finances;
  • Helped 60,000 people through an insolvency procedure;
  • And started work on cases that will help repay £5 billion of personal debt to creditors by 2018-19.

The UK’s insolvency and restructuring profession includes around 1,500 licensed insolvency practitioners who take insolvency appointments – you can find a nearby insolvency practitioner here.

Legal notice

Please note that the information contained on this website is a guide only. It is not an exhaustive statement of the relevant law or substitute for professional legal or financial advice and should not be relied upon as such.  R3 cannot accept responsibility for any action you take in reliance on its contents. This guide principally applies to England and Wales and reflects the position as at 1 February 2018. The information for Scotland will be updated when the new insolvency rules are introduced during 2019.