Administration and Receivership Flashcards
(10 cards)
What is the primary statutory objective of administration under Schedule B1 IA 1986?
A. To maximise dividends to shareholders
B. To rescue the company as a going concern
C. To liquidate company assets as fast as possible
D. To protect employees’ interests
B. To rescue the company as a going concern
Explanation: This is the first objective in the statutory hierarchy. If not achievable, the administrator moves to the next objective.
Which party is NOT entitled to apply to court for the appointment of an administrator?
A. A shareholder
B. The company
C. A creditor
D. A CVA supervisor
A. A shareholder
Explanation: Shareholders do not have the power to apply to court for administration. The company, its directors, a creditor, or a CVA supervisor can apply.
What happens to a winding-up petition when the court makes an administration order?
A. It is stayed
B. It proceeds in parallel with administration
C. It is automatically dismissed
D. It is transferred to another court
C. It is automatically dismissed
Explanation: The making of an administration order automatically dismisses any pending winding-up petition.
Which of the following is NOT a feature of the administration moratorium?
A. No winding up petitions can be filed
B. Creditors cannot enforce security without consent
C. Landlords cannot forfeit leases
D. Directors are removed from office
D. Directors are removed from office
Explanation: Directors remain in office, but their powers are suspended unless the administrator consents.
A director files a Notice of Intention to appoint an administrator. The company has a qualifying floating charge holder (QFC). What must happen next?
A. The administrator is automatically appointed
B. The directors must seek court approval
C. The QFC has five business days to appoint its own administrator
D. The creditors vote on the appointment
C. The QFC has five business days to appoint its own administrator
Explanation: The QFC has 5 business days to respond and appoint their own administrator before directors proceed.
A bank has a fixed charge over a warehouse. The company defaults. What type of receiver is the bank most likely to appoint?
A. Administrative receiver
B. Fixed charge receiver
C. Monitor
D. CVA supervisor
B. Fixed charge receiver
Explanation: Fixed charge receivers are appointed under the terms of the security to manage or sell specific assets.
Which of the following statements about a pre-packaged administration is correct?
A. It requires creditor approval before the administrator is appointed
B. It is only available to companies in liquidation
C. It delays the sale of assets until the creditors approve
D. It allows the sale of assets immediately after appointment
D. It allows the sale of assets immediately after appointment
Explanation: The deal is agreed before administration and completed by the administrator immediately on appointment.
What is one restriction placed on pre-packaged sales to connected persons under the 2021 Regulations?
A. They must be approved by all unsecured creditors
B. They must have creditor approval or an evaluator’s qualifying report
C. They must go through a court order
D. They must involve a change in directors
B. They must have creditor approval or an evaluator’s qualifying report
Explanation: This ensures transparency where assets are sold to connected parties like directors or shareholders.
What power does an administrator NOT have without court or creditor consent?
A. Remove directors
B. Borrow funds
C. Pay dividends to unsecured creditors
D. Dispose of property subject to a floating charge
C. Pay dividends to unsecured creditors
Explanation: Administrators must obtain court approval to pay dividends to unsecured creditors.
What distinguishes a fixed charge receiver from an administrator?
A. They act only in the interest of the secured creditor who appointed them
B. They always replace directors
C. They handle company-wide debt restructuring
D. They are appointed only by the court
A. They act only in the interest of the secured creditor who appointed them
Explanation: Fixed charge receivers are not collective officeholders and owe duties to the appointing creditor.
