Companies and credit United Kingdom insolvency law

the credit ratings industry dominated fitch, moody s , s&p, london headquarters in canary wharf. companies pay rating agencies rate them, because provides access cheaper loans.

companies legal persons, created registering constitution , paying fee, @ companies house. natural person, company can incur legal duties , can hold rights. during life, company must have board of directors, hires employees. these people represent company, , act on behalf. can use , deal property, make contracts, settle trusts, or maybe through misfortune commission torts. company regularly becomes indebted through of these events. 3 main kinds of debts in commerce are, first, arising through specific debt instrument issued on market (e.g. corporate bond or credit note), second, through loan credit advanced company on terms repayment (e.g. bank loan or mortgage) and, third, sale credit (e.g. when company receives goods or services has not yet paid them. however, principle of separate legal personality means in general, company first person have liabilities. agents of company (directors , employees) not liable obligations, unless assumed. companies have limited liability investors. under insolvency act 1986 section 74(2)(d) means shareholders cannot sued obligations company creates. principle holds wherever debt arises because of commercial contract. house of lords confirmed corporate veil not lifted in salomon v salomon & co ltd. here, bootmaker not liable company s debts though person ran business , owned shares. in cases debt arises upon tort against non-commercial creditor, limited liability ceases issue, because duty of care can owed regardless. held case in chandler v cape plc, former employee of insolvent subsidiary company sued (solvent) parent company personal injury. when company has no money left, , nobody else can sued, creditors may take on company s management. creditors appoint insolvency practitioner carry out administration procedure (to rescue company , pay creditors) or else enter liquidation (to sell off assets , pay creditors). moratorium takes effect prevent individual creditor enforcing claim against company. insolvency practitioner, under supervision of court, can make distributions creditors.

the causes of corporate failure, @ least in market segment of economy, begin of creation of credit , debt. excessive debts run through outright embezzlement of company s assets or fraud people run business. negligent mismanagement, found breach duty of care, found. more frequently, companies go insolvent because of late payments. business on company relied credit or supplies in financial distress, , string of failures part of broader macroeconomic depression. periodically, insolvencies occur because technology changes outdates lines of business. frequently, however, businesses forced insolvency because out-competed. in economy organised around market competition, , competition presupposes losers or contemplates excess, insolvencies happen. variety of causes corporate failure means law requires different responses particular issues, , reflected in legal meaning of insolvency.