BL - Insolvency corp Liquidation

Question 2

Receivership
What is Receivership?

Answer 2

Receivership is an individual enforcement procedure which benefits only the appointing creditor.

Question 3

Receivership
Who can appoint a Receiver?

Answer 3

Fixed charge holders.

It will be a condition of the debenture that a receiver can be appointed.

Question 4

Liquidation
What is the aim of Liquidation?

Answer 4

A company’s business is wound up and its assets transferred to creditors and (if there is a surplus of assets over liabilities) to its members.

Question 5

Liquidation
What are the two types of liquidation?

Answer 5

1. Compulsory liquidation
2. Voluntary liquidation – which is further subdivided into:

• Members’ voluntary liquidation
• Creditors’ voluntary liquidation.

Question 6

When is a company dissolved by liquidation?

Answer 6

3 months after the liquidator files notice at coy House.

Question 7

Liquidation
Compulsory liquidation is a court based procedure, what are the grounds for a compulsory liquidation?

Answer 7

• the company is unable to pay its debts

AND

• it is just and equitable for the company to be wound up.

Question 8

Liquidation
Compulsory liquidation what is the process for compulsory liquidation?

Answer 8

• applicant presents a winding up petition to the court
• if court agrees, will appoint Official receiver

Question 9

Liquidation
Compulsory liquidation who can apply?

Answer 9

• creditor
• the company
• administrator
• supervisor of CVA

Question 10

Liquidation
Compulsory liquidation in what circumstances will a company be found to be unable to pay its debts?

Answer 10

• cash flow test
• balance sheet test
• failure to pay a statutory demand for over £750 (coy has 21 days to pay)
• judgement debts go unpaid

Question 11

Liquidation
Compulsory liquidation how are coy assets protected?

Answer 11

• transfers of property and shares are void after the presentation of the winding up petition without court order

Question 12

Liquidation
Compulsory liquidation what happens on the court making a winding up order?

Answer 12

• Moratorium
• all employees are dismissed
• Directors lose their powers