Glossary
Insolvency
Generally, being unable to meet financial obligations as they become due. Essentially, the company lacks sufficient cash flow or assets to pay its debts on time. Insolvency can occur in two main forms:
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Cash-Flow Insolvency (Inability to pay debts).
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Balance Sheet Insolvency (Liabilities exceed assets.
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You could be solvent on a balance sheet basis but unable to realise cash quickly enough to pay your debts. Therefore you would be insolvent on a cash-flow basis.
Creditor
A creditor is someone who is owed money.
Debtor
A debtor is someone who owes money.
Secured Creditor
A secured creditor holds a legal right over one or assets. For example, a lender with a mortgage over a property is secured as the mortgage gives them rights to receive their money back first on the sale of a property.
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A QFCH is another example of a secured creditor.
QFCH
​A Qualifying Floating Chargeholder ("QFCH") is a creditor who holds a floating charge over the nearly all or all of the company's assets. The charge would be registered at Companies House against the company and is generically referred to as having "security" over the company's assets. It is typically held by someone who has a lending relationship with the company such as a bank.
Moratorium
Legal protection that halts creditor actions against a company or individual when an insolvency process is commenced. It offers time to look at options to restructure financial affairs.