Insolvency Made Clear: A Guide for Debtors

Legal Terms Defined
A ‘third party’ is a stranger to either a) a transaction or b) a legal claim. For an
example of each: a) if a lender makes a loan with a debtor, the debtor’s spouse is
a ‘third party’ to the loan; and b) if a creditor applies to make the debtor bankrupt,
the debtor’s family are ‘third parties’ to the bankruptcy petition.
The ‘Trustee in Bankruptcy’ or ‘Trustee’ is the Insolvency Practitioner who takes
control over the bankrupt’s financial affairs. This will be the only way in which
the word ‘Trustee’ is used in this book.
A transaction at an ‘undervalue’ is one where the asset is transferred for less
than it is worth: for example, if something of value is given away for free.
An ‘undischarged bankrupt’ is someone whose bankruptcy is continuing; but a
‘discharged bankrupt’ has completed the process.
A ‘validation’ order is where the court gives permission for a transaction to take
place. This is necessary if the transaction took place after the presentation of a
bankruptcy or winding up petition.
‘Vests’ refers to the transfer of ownership of property, e.g. if I sell a car, the car
vests in the purchaser.
The ‘winding up’ of a company is the same as its liquidation.
A ‘without prejudice’ document is a confidential communication which tries to
settle a dispute. Without prejudice communication is privileged: it cannot be
shown to the judge.
A ‘witness statement’ is a formal written account of events. Witness statements
typically contain an exhibit with documents as supporting evidence. It is the
primary way in which someone gives the court information.
Symbols and acronyms
Numbers in square brackets are usually paragraph references to a judgment.
Legal cases have standard ways of being referred to (‘cited’). The most common,
and the version this book uses where possible, is the ‘neutral citation’. An example
is [2021] EWHC 222: this means that judgment was given in 2021, in
the England and Wales High Court, and it was the 222 nd judgment that year.
Sometimes the letters (Ch) appear afterwards: this refers to the ‘Chancery’ division
of the High Court. Another example could be [2021] EWCA Civ 123 where
EWCA refers to the England and Wales Court of Appeal and Civ means that it
is a civil, as opposed to a criminal, case.
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