UCL Faculty of Laws


Liquidation and its Consequences (Foundations of Corporate Insolvency) (LAWS0285)

This module covers the law of England and Wales relating to the insolvency of companies. The principles of the law are studied together with the relevant statutory and case law authorities, and are evaluated in the light of evolving legal policy and proposals for reform.

The course deals with the winding up of insolvent companies and with the treatment of assets and claims upon liquidation. This also includes a consideration of the role played by various forms of security and quasi-security interests, including fixed and floating charges, in mitigating the impact of the company’s insolvency on certain creditors. Another important theme is the way the law aims to counteract improper or imprudent conduct on the part of directors and others with responsibility for the conduct of the insolvent company, resulting in increased risk of loss to creditors and others.

Module syllabus 

Section 1. General Introduction to Insolvency Law. 

  1. Evolution, objectives and principles. A survey of the development of insolvency law, and its evolving objectives as reflected in case decisions and statutory provisions. The historic divergence between personal and corporate insolvency law: contrasts and consequences. Convergence in recent times: the major legislative reforms of 1986, 2000, and  2002 and 2020. The present day regulation of the law and its administration.  

  1. Iinsolvency as a fact and as a legal concept. Definitions of “insolvency”. Different tests applied to establish insolvency in various contexts. The meaning and relevance of “inability to pay debts”.  

  1. Some fundamental principles: the principle of collectivity; the effect of bankruptcy and winding up on real and personal rights; the principle of pari passu distribution. 

Section 2. The two forms of liquidation; from commencement to the liquidator’s appointment. 

  1. Voluntary liquidation: principal features; advantages, uses and abuses; the nature and purpose of the 1986 reforms.  

  1. Compulsory Liquidation (Winding Up by the Court): principal features; grounds for petition; the winding up order and its consequences.  

  1. Liquidators: their status, duties and powers. Mode of appointment. 

Section 3. The assets comprising the estate: their extent, administration and distribution. 

  1. Defining and consolidating the estate available for creditors.  

  1. Security and quasi-security interests and their characterisation: the impact of insolvency on such interests. Fixed and floating charges. Registered and unregistered security interests; trust devices; retentionservation of title.  

  1. Augmentation of the assets through avoidance of antecedent transactions: preferences; transactions at undervalue; floating charges given by insolvent companies; transactions defrauding creditors. Disclaimer of onerous property.  

  1. Proof of debts. Sequence of distribution of assets. Liquidation expenses. Preferential creditors. Secured and unsecured creditors. “Prescribed part” for unsecured creditors. Rights of set-off.  

  1. The conclusion of the liquidation: dissolution of the company and discharge of the liquidator.  

Section 4. Improper trading and the duties of directors to creditors. 

Fraudulent trading and wrongful trading. Misfeasance and breach of duty by directors and office holders. Disqualification of directors and other penalties and sanctions.  

Recommended materials 

The recommended core textbooks for this module are:  

  • A. Keay & P. Walton, Insolvency Law: Corporate and Personal, 5th edition (2020, LexisNexis). 

  • V. Finch & D. Milman, Corporate Insolvency Law: Perspectives and Principles, 3rd edition (2017, Cambridge University Press). 

Students might additionally wish to consult either or both of the following more extensive textbooks at times during the course:  

  • K. Van Zwieten (ed.), Goode on Principles of Corporate Insolvency Law, 5th edition (2018, Sweet & Maxwell) 

  • I.F. Fletcher, The Law of Insolvency, 5th edition (2017, Sweet & Maxwell) 

Module reading lists and other module materials will be provided via online module pages, once students have made their module selections upon enrolment.

Preliminery Reading

  • Keay & Walton (see above), chapters 1-3 

  • Finch & Milman (see above), chapter 1-2 

  • Goode (see above), chapters 1-3 

  • Fletcher (see above), chapters 1, 2 & 17 

Key Information

Module details
Credit value:22.5 Credits (225 learning hours)
Convenor:Prof Marc Moore
Other Teachers:


Teaching Delivery:10 x 2-hour weekly lectures, Term 1
Who may enrol:LLM Students
Prerequisites:None specified, but students will find it advantageous to have a knowledge of the law of companies (not necessarily based on the laws of the UK) 
Must not be taken with:None
Qualifying module for:LLM in Corporate Law;  
LLM in International Commercial Law 
Practice Assessment:One piece of non-assessed written work 
Final Assessment:Controlled Condition Exam (100%)