Insolvency Act 1986, section 390

Persons not qualified to act as insolvency practitioners

Part XIII Insolvency Practitioners and their Qualification

(1)A person who is not an individual is not qualified to act as an insolvency practitioner.

[F1075 (2)A person is not qualified to act as an insolvency practitioner at any time unless at that time the person is appropriately authorised under section 390A.F1075]

(3)A person is not qualified to act as an insolvency practitioner in relation to another person at any time unless—

(a)there is in force at that time security or, in Scotland, caution for the proper performance of his functions, and

(b)that security or caution meets the prescribed requirements with respect to his so acting in relation to that other person.

(4)A person is not qualified to act as an insolvency practitioner at any time if at that time—

(a)he has been [F1076madeF1076] bankrupt [F1077under this Act or the Insolvency (Northern Ireland) Order 1989F1077] or sequestration of his estate has been awarded and (in either case) he has not been discharged,

[F1078 (aa)a moratorium period under a debt relief order [F1079 under this Act or the Insolvency (Northern Ireland) Order 1989F1079] applies in relation of him,F1078]

[F1080 (b)he is subject to a disqualification order made or a disqualification undertaking accepted under the Company Directors Disqualification Act 1986 or the Company Directors Disqualification (Northern Ireland) Order 2002,F1080]

(c)F1081he is a patient within the meaning of . . . [F1082section 329(1) of the Mental Health (Care and Treatment)(Scotland) Act 2003F1082][F1083 or has had a guardian appointed to him under the Adults with Incapacity (Scotland) Act 2000 (asp 4).F1083][F1084 , or

(d)he lacks capacity (within the meaning of the Mental Capacity Act 2005) to act as an insolvency practitioner.F1084]

[F1085 (5)A person is not qualified to act as an insolvency practitioner while there is in force in respect of that person—

(a)a bankruptcy restrictions order under this Act, the Bankruptcy (Scotland) Act 1985 [F1086 or the Bankruptcy (Scotland) Act 2016F1086] or the Insolvency (Northern Ireland) Order 1989, or

(b)a debt relief restrictions order under this Act or that Order.F1085]

Cases considering section 390 4

Nicholas William Nicholson & Anor v Insolvency Practitioners Association & Ors

[2026] EWHC 686 (Ch) · 24 March 2026Interprets

Confirms that an insolvency practitioner must have security for proper performance of functions, but holds that the provision does not impose on an RPB the functions of entering into, holding or assigning IP bonds. Its purpose supports compensation for estates suffering fraud or dishonesty. (see paras [109],[115],[212])

Paul Yerbury v Azets Holdings Limited

[2025] EWHC 757 (KB) · 31 March 2025

The provision was considered with section 30 as part of the statutory framework indicating that only individuals, rather than corporate entities, may hold the relevant insolvency office. (see para [35])

Laurence Pagden & Ors v Core VCT PLC & Ors

[2025] EWHC 2316 (Ch) · 10 September 2025

Confirms that insolvency practitioners are individuals rather than firms, while recognising the commercial role of firms supporting individual liquidators. (see paras [17]-[20]) Confirms the regulatory qualification requirements for insolvency practitioners, but finds that those requirements do not establish an inherent prohibition on limitation clauses. (see paras [17]-[18]) Confirms the statutory basis for a liquidator’s bond. The existence of a capped bond did not support limitation of the liquidator’s own liability and, if anything, showed that Parliament accepted a limit for the bond. (see paras [45]-[47])

What each judgment says about section 390 is in the case-law panel in the full Act.

Amendments and notes

17 notes from legislation.gov.uk

Amendments

  1. F1075S. 390(2) substituted (1.10.2015) by Deregulation Act 2015 (c. 20), ss. 17(2), 115(7); S.I. 2015/1732, art. 2(c)
  2. F1076Word in s. 390(4)(a) substituted (6.4.2016) by Enterprise and Regulatory Reform Act 2013 (c. 24), s. 103(3), Sch. 19 para. 58; S.I. 2016/191, art. 2 (with art. 3)
  3. F1077Words in s. 390(4)(a) inserted (1.10.2015) by Small Business, Enterprise and Employment Act 2015 (c. 26), ss. 115(a)(i), 164(1); S.I. 2015/1689, reg. 2(i) (with Sch. para. 13)
  4. F1078S. 390(4)(aa) inserted (24.2.2009 for certain purposes otherwise 6.4.2009) by Tribunals, Courts and Enforcement Act 2007 (c. 15), ss. 108(3), 148(5), Sch. 20 para. 6(2); S.I. 2009/382, art. 2
  5. F1079Words in s. 390(4)(aa) inserted (1.10.2015) by Small Business, Enterprise and Employment Act 2015 (c. 26), ss. 115(a)(ii), 164(1); S.I. 2015/1689, reg. 2(i) (with Sch. para. 13)
  6. F1080S. 390(4)(b) substituted (1.10.2009) by The Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009, (S.I. 2009/1941), arts. 2(1), 8, Sch. 1 para. 78(4) (with art. 10, Sch. 1 para. 84)
  7. F1081Words in s. 390(4)(c) repealed (1.10.2007) by Mental Capacity Act 2005 (c. 9), ss. 67(1)(2), 68, Sch. 6 para. 31(3)(b), Sch. 7 (with ss. 27-29, 62); S.I. 2007/1897, art. 2(1)(d)
  8. F1082Words in s. 390(4)(c) substituted (27.9.2005 for S. and 5.10.2005 otherwise) by The Mental Health (Care and Treatment) (Scotland) Act 2003 (Modification of Enactments) Order 2005 (S.S.I. 2005/465), art. 2, Sch. 1 para. 18(3) and The Mental Health (Care and Treatment) (Scotland) Act 2003 (Consequential Provisions) Order 2005 (S.I. 2005/2078), arts. 1, 15, Sch. 1 para. 3(3)
  9. F1083Words in s. 390(4)(c) inserted (S.) (1.4.2002) by 2000 asp 4, s. 88(2), Sch. 5 para. 18; S.S.I. 2001/81, art. 3, Sch. 2
  10. F1084S. 390(4)(d) and preceding word inserted (1.10.2007) by Mental Capacity Act 2005 (c. 9), ss. 67(1), 68, Sch. 6 para. 31(3)(c) (with ss. 27-29, 62); S.I. 2007/1897, art. 2(1)(d)
  11. F1085S. 390(5) substituted (1.10.2015) by Small Business, Enterprise and Employment Act 2015 (c. 26), ss. 115(b), 164(1); S.I. 2015/1689, reg. 2(i) (with Sch. para. 13)
  12. F1086Words in s. 390(5)(a) inserted (30.11.2016) by The Bankruptcy (Scotland) Act 2016 (Consequential Provisions and Modifications) Order 2016 (S.I. 2016/1034), art. 1, Sch. 1 para. 4(8)

Modifications

  1. C1154s.390 applied with modifications by S.I. 1986/1999, art. 3, Sch. 1 Pt. II
  2. C1155S. 390 applied (with modifications) (17.2.2009 for certain purposes, otherwise 21.2.2009) by Banking Act 2009 (c. 1), ss. 103, 263(1)(2) (with s. 247); S.I. 2009/296, arts. 2, 3, Sch. para. 2 (as amended (7.4.2017) by The Deregulation Act 2015, the Small Business, Enterprise and Employment Act 2015 and the Insolvency (Amendment) Act (Northern Ireland) 2016 (Consequential Amendments and Transitional Provisions) Regulations 2017 (S.I. 2017/400), regs. 1(2), 5(4))
  3. C1156S. 390 applied (with modifications) (17.2.2009 for certain purposes, otherwise 21.2.2009) by Banking Act 2009 (c. 1), ss. 145, 263(1)(2) (with s. 247); S.I. 2009/296, arts. 2, 3, Sch. para. 3 (as amended (7.4.2017) by The Deregulation Act 2015, the Small Business, Enterprise and Employment Act 2015 and the Insolvency (Amendment) Act (Northern Ireland) 2016 (Consequential Amendments and Transitional Provisions) Regulations 2017 (S.I. 2017/400), regs. 1(2), 5(10))
  4. C1157Ss. 390-391T applied (with modifications) (E.W.S.) (8.7.2021) by The Payment and Electronic Money Institution Insolvency Regulations 2021 (S.I. 2021/716), regs. 2, 37 (with reg. 5) (as amended (4.1.2024) by S.I. 2023/1399, regs. 1(2), 4, 11)
  5. C1158S. 390(2)(3) modified by S.I. 1990/1392, art. 7