Chapter 10: Insolvency Law Flashcards
What are the 2 options a business has when facing financial difficulty?
Administration- aim to rescue company where practitioner managers company
Liquidation- wind up company (ceasing business)
What is moratorium?
Moratorium- A consequence of administration. Rights of creditors suspended, petition to wind up dismissed etc
Director powers suspended
Give 3 tasks of administration
o Take on director power
o Must file notice of appt within 7 days
o Must draw up statement of proposal within 8 weeks
What is receivership?
Realising company assets, which are sold to enable company to pay off debts
What is the 4 duties of the receiver
Borrow
Follow legal procedure
Appoint advisor
Pay debt
What is a company voluntary arrangement?
Allows corp to enter arrangement where creditor agrees to pay of proportion of debts over period of time
What is voluntary liquidation and what are the 2 types of it?
Where the members pass a resolution to go into liquidation
Member VL- used when company is solvent
Creditor VL- used when company is insolvent
What is compulsory liquidation?
When a petition for winding up order is presented to court
What are 3 effects of winding up
wRecovery of debt against company stopped
Floating charge crystallise
legal proceeding and business stopped
Who can propose CVA and how long does it last
Director, Administrator, Liquidator
3-5 yrs
With regard to a members’ voluntary winding up of a company who makes declaration of solvency? How do you appt liquidator and by who?
Majority of directors
Ordinary Resolution and directors
declaration of solvency applicable to a members’ voluntary winding up must be made not more than?
5 weeks
On a compulsory winding up of a company, who will the court usually appoint?
Official Receiver
when would a floating charge to a connected person be void?
Made within 2 years before liquidation
Within how many days must an administrator make req for statements known to employees and how long do they have to reply?
7 and 11 days
