Flashcards in Insolvency law: Corporate and personal Deck (25):
What is administration?
- the aim to rescue a company as a going concern
- achieve a better result for creditors than liquidation
- realise property to pay one or more secured or preferential creditors
Who can appoint an administrator?
- a company
- one or more creditors
- qualifying floating charge holder
Within how many days must an administrator make their requirements for statements known and how long do the officers and employees have to comply?
- 7 days
- 11 days
How long does administration last?
Usually 12 months - can be extended with consent of court or by majority of creditors
What are the consequences of being under administration?
- administrator takes over power from directors
- moratorium in place
- assets subject to floating charge can be sold
- assets on fixed charge can be sold with approval of the court
- contracts of employment can be terminated
What is the role of a receiver?
Realisation of company's assets which are then sold
Describe Company Voluntary Arrangements (CVA)
- alternative to winding up
- agreement between company and creditors setting on which debts are to be paid , and in what proportion
- members by simple majority or creditors by 75% majority must approve proposed CVA
- CVA binding on all unsecured creditors
- directors can apply for short moratorium
Who can propose a CVA nominee?
How long does CVA usually last?
3 - 5 years
What type of resolution needs to be passed for voluntary liquidation?
- special in most circumstances
- ordinary if period fixed for duration of company expires
When does a members' and creditors' voluntary wind up apply?
- members' when company solvent
- creditors' when company insolvent
Describe the members' voluntary winding up process
- directors make declaration of solvency, pay debts in 12 months
- liquidator appointed by members
- statement of solvency
- liquidator reports to members
Describe the creditors' voluntary winding up process
- insolvent company
- liquidator appointed by members and creditors
- statement of affairs
- liquidator reports to members and creditors
What are the possible grounds for petition on compulsory liquidation?
- plc not been issued trading cert within year of inc
- creditor owed >=£750 has served a written demand and not been paid in 3 weeks
- just and equitable if no other options by court
Who can petition for compulsory liquidation?
- the BIS
- a member (6 of last 18 months)
- creditor owed £750 and done written thing
Who is appointed as the liquidator in compulsory liquidation?
Who does the liquidator for compulsory liquidation report to?
What charges can be avoided?
- charges not registered within 21 days
- floating charge created within 12 months of wind up (2 years if connected person)
- undervalued transaction within 2 years unless they can prove good faith, best for business
What is the order of people receiving their money upon liquidation?
- fixed charge
- floating charge
- unsecured creditors
- post-liquidation interest
- members dividends then capital
What is an individual voluntary arrangement (IVA)?
Alternative to bankruptcy, whereby an individual has an agreement with their creditors
Process for IVA
- individual appoints a nominee
- nominee must call creditors meeting
- creditors accept or reject proposals
- if accepted, supervisor appointed
- upon completion, all liabilities within are discharged
Who can petition for bankruptcy?
- unsecured creditor owed £750
- supervisor of an IVA
Process of bankruptcy
- petition received by courts
- pass a bankruptcy order
- become undischarged bankrupt
- trustee appointed to administer bankruptcy
- trustee requires creditors to prove their debts and will rank them
Request for individual bankruptcy will not be made when
- debts are