Insolvency Law
Insolvency tests, administration, liquidation, creditor priority, antecedent transactions and director exposure.
How to study ACCA Applied Skills
Build on Applied Knowledge, use the correct UK law and tax versions, practise workplace-style digital responses and keep each independent 50% pass decision visible.
Core concepts
Concept 1
Insolvency may be identified through inability to pay debts or an adverse balance-sheet position, with different procedures pursuing rescue or realisation.
Exam cue: Identify solvency evidence and the procedure's statutory purpose.
Concept 2
Administration protects a statutory purpose while liquidation collects and distributes assets before dissolution.
Exam cue: Classify each claim and security before applying distribution priority.
Concept 3
Creditor priority, secured interests and challengeable pre-insolvency transactions shape recoveries.
Exam cue: Check timing, knowledge and value when reviewing antecedent transactions or director conduct.
Risk pitfalls and guardrails
Treating administration and liquidation as interchangeable.
Guardrail: Do not reuse a legal rule, tax amount, reporting format, audit phrase or finance formula without checking scope, date, units and evidence.
Ranking all creditors equally without considering security and statutory priority.
Guardrail: Do not reuse a legal rule, tax amount, reporting format, audit phrase or finance formula without checking scope, date, units and evidence.
Assuming limited liability always protects directors from misconduct claims.
Guardrail: Do not reuse a legal rule, tax amount, reporting format, audit phrase or finance formula without checking scope, date, units and evidence.
Memory anchors
Cash-flow Insolvency
Cash-flow insolvency is inability to pay debts as they fall due.
Balance-sheet Insolvency
Balance-sheet insolvency arises when liabilities exceed assets under the statutory assessment.
Administration
Administration seeks rescue or a better creditor result under an administrator's control.
Liquidation
Liquidation realises assets, distributes proceeds and leads toward dissolution.
Wrongful Trading
Wrongful trading may expose a director who fails to minimise creditor loss after unavoidable insolvency becomes apparent.
Checkpoint rule
Do the check-up only after you can summarize each concept in one sentence and identify one dangerous pitfall from memory.
Knowledge Check (after reading)
Short check-up to confirm understanding of this module.
Check-up Questions
A company cannot pay debts as they fall due. Which insolvency test is indicated?
Company liabilities exceed the value of its assets, including contingent liabilities. Which test is relevant?
Answer all questions to submit.
Next step personalized recommendations
Continue learning
Move forward only after this module is stable.
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