Chapter 16 - Implementation of administration Flashcards

1
Q

Administration - advantages of trading on for the longer term

A
  • facilitates a going concern sale which should realise more assets than a forced sale
  • minimises bad publicity caused by closures and job losses
  • if the IP’s continued trading is profitable, this will enhance the floating charge realisations
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2
Q

Within what time period must an administrator decide whether or not he wants to retain employees?

A

Within 14 days of appointment

After this time period he will be deemed to have adopted the employee contracts and ongoing wages will be expense of liquidation.

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3
Q

What is the statutory notice periods for employees being dismissed?
What is the maximum?

A

Worked for 1 month to 2 years = 1 week

Then add a week for every year of service
so 2-3 years = 2 weeks
3-4 years = 3 weeks

Up to a maximum of 12 weeks

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4
Q

How long does an employee need to have worked for to claim redundency?

A

Continued employment for a period of two years

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5
Q

What element of employees pay is preferential?

A

Arrears of wages restricted to 4 months pre-relevant date. Max £800 per employee

All holiday pay is preferential

Employee contributions in the 4 months prior to relevant date

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6
Q

What SIP deals with sales to directors?

A

SIP13

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7
Q

What is a pre-pack administration?

A

Involves agreeing the sale of the business before the company enters into liquidation.

This allows the sale of the business to be completed immediately after administration is effected and should give best deal for creditors.

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8
Q

Who does the IP need to inform regarding a SIP16 pre-pack?

A

Their RPB (rather than the insolvency service)

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9
Q

Administration - When should a sale to a connected party be notified to creditors?

A

Be provided in first notification to creditors and within 7 calendar days of the transaction.

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10
Q

Administration - when a pre-packaged sale has been undertaken, when should the administrator seek the requisite approval of proposals?

A

As soon as practical after appointment

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11
Q

Administration - priority of payments (waterfall) to creditors

A

Fixed charge assets
1 costs of preserving and realising asset
2 fixed charge holder

Floating charge assets:
1 costs of preserving and realising asset
2 liabilities for wages/employees adopted by admin
3 admins remuneration an expenses
4 preferential creditors
5 where floating charge on or after 15 Sept 03 a prescribed part must be paid to unsecured creditors
6 floating charges
7 any surplus to unsecured

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12
Q

True or false - an administrator can only realise fixed charge assets with the consent of the charge holder or court

A

True

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13
Q

What are the exit routes out of administration?

A

Handing back to directors

Petition for winding up

File for CVL

File for dissolution (only when all realisations distributed)

Obtaining creditors approval for CVA

Allowing admin to lapse through expiry of 12 month fixed period

Apply to court to end administration

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14
Q

Can an administrator petition for a compulsory winding up

A

Yes

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15
Q

When can an administrator file to place a company into a creditors voluntary liquidation?

A

The total amount which each secured creditor of the company is likely to receive has been paid or set aside.

A distribution to the unsecured creditors will be made over and above the prescribed part.

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16
Q

If an administrator wants to put the company into a CVL, does that need to be a:
BM
SH
Creditors meeting

A

No

17
Q

Can an administrator disclaim onerous property?

A

No

18
Q

If an administrator files for CVL when is the relevant time calculated from?

A

Relevant time will be calculated from commencement of the administration not from the resolution to wind up

19
Q

Can an administrator bring claims against directors for misfeasance?

A

No

20
Q

Can an administrator bring claims against directors for wrongful or fraudulent trading?

A

YES

21
Q

Administration - is sanction of the court needed to make payment to:
Secured creditors
Preferential creditors
Unsecured creditors

A

Secured creditors - no

Preferential creditors - no

Unsecured creditors - if over and above the prescribed part

22
Q

Once filed at companies house to dissolve company, when is the company deemed dissolved?

A

3 months later

23
Q

Can the supervisor of a CVA challenge antecedent transactions?

A

No

24
Q

Does the supervision of a CVA have power to enforce directors co-operation under S234 and S237?

A

No

25
Q

Can supervisors of CVA disclaim onerous property?

A

No

26
Q

Can supervisors of CVA bring actions under misfeasance, wrongful trading or fraudulent trading?

A

No

27
Q

How long can creditors extend an administration for?
and what creditors can give consent?

A

Can extend for a maximum of 12 months (up from 6 since SBEEA 2015) - they can only extend it once.

Where there will be a distribution to unsecured creditors (over prescribed part), consent can be given by:
- each secured creditor (unanimous) plus
- more than 50% of the unsecured creditors

If only prescribed part being paid:
- Ask secured (unanimous)
- and Prefs (need 50%)

28
Q

How long can a court extend an administration for?

A

Indefinitely

29
Q

When must an administrator apply to court for an extension by?

A

Not less than 1 month before the administration comes to an end

30
Q

When must the final administrators report be filed by and to where?

A

Filed with court and registrar of companies within 5 business days of the end of the admin

31
Q

Administration is approved for extension, who do they need to tell and in what time limit?

A

Court, CH and creditors

As soon as reasonable practicable

32
Q

Administration - if you ask court for an extension, can you then ask creditors for an extension?

A

No