Business Flashcards
What is a transaction at undervalue
This is where the company makes a gift to another person or enters into a transaction and receives consideration which is significantly lower in value than market value.
A liquidator/administrator can challenge any transaction which the company has entered into at an undervalue at the relevant time.
What are book debt? Can they be subject to a charge?
Debts owed to the company (asset)
Can be charged (fixed or floating)
In a CVA, 75% or more in value of the company’s creditors and
50% or more of non-connected creditors must approve a CVA proposal.
Who decides whether the creditors are connected or not?
The chair of the CVA meeting, usually the Insolvency Practitioner.
Before borrowing money on behalf of the company, what should the directors check?
Company constitution - check if any restrictions in the articles
Check if they have the authority to act - comes from MA3, check to see if articles place restrictions / conditions on this authority
Check partnership agreements
When can a wrongful trading claim be brought?
Such claims can only be brought when a company is in insolvent liquidation or insolvent administration.
As a remedy, the court may order the director to make a contribution to the company’s assets, increasing the amount of money available to pay creditors.
