Insolvency law: Corporate and personal Flashcards Preview

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Flashcards in Insolvency law: Corporate and personal Deck (25):
1

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

2

Who can appoint an administrator?

- a company
- directors
- one or more creditors
- qualifying floating charge holder

3

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

4

How long does administration last?

Usually 12 months - can be extended with consent of court or by majority of creditors

5

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

6

What is the role of a receiver?

Realisation of company's assets which are then sold

7

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

8

Who can propose a CVA nominee?

- company
- administrator
- liquidator

9

How long does CVA usually last?

3 - 5 years

10

What type of resolution needs to be passed for voluntary liquidation?

- special in most circumstances
- ordinary if period fixed for duration of company expires

11

When does a members' and creditors' voluntary wind up apply?

- members' when company solvent
- creditors' when company insolvent

12

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

13

Describe the creditors' voluntary winding up process

- insolvent company
- liquidator appointed by members and creditors
- statement of affairs
- liquidator reports to members and creditors

14

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

15

Who can petition for compulsory liquidation?

- the BIS
- a member (6 of last 18 months)
- creditor owed £750 and done written thing

16

Who is appointed as the liquidator in compulsory liquidation?

Official receiver

17

Who does the liquidator for compulsory liquidation report to?

Court

18

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

19

What is the order of people receiving their money upon liquidation?

- liquidators
- fixed charge
- employees
- floating charge
- unsecured creditors
- post-liquidation interest
- members dividends then capital

20

What is an individual voluntary arrangement (IVA)?

Alternative to bankruptcy, whereby an individual has an agreement with their creditors

21

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

22

Who can petition for bankruptcy?

- individual
- unsecured creditor owed £750
- supervisor of an IVA

23

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

24

Request for individual bankruptcy will not be made when

- debts are

25

What does the estate of a trader exclude?

- tools
- property held on trust for other person
- certain tenancies protected by law