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Law > Company insolvency > Flashcards

Company insolvency Flashcards

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1
Q

What is the timeline regarding when administrator is appointed?

A

Administrator appointed
7 DAYS - notify registrar about his appointment
11 DAYS - employees and company to comply with request from admin. Give SOFA (statement of affairs)
8 WEEKS - proposal for achieving aim of admin
10 WEEKS - administrator holds a creditor meeting - unless not enough money to distribute to unsecured creditors

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2
Q

Who. Can apply for administration (application to court) and what is the process?

A

APPLICATION TO COURT
- directors, shareholders (OR) or creditors

Showing that co is likely to be unable to pay debts and administration will work

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3
Q

If a company’s Constitution does not specify any distinction between its shares, it is assumed that they are all ordinary shares-true or false?

A

True!

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4
Q

How are class rights varied?

A

By a special resolution of the relevant class or written resolution with 75% or any express provision in the company’s AOA

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5
Q

What are ways of being unfairly prejudice? (Four)

A
  • exclusion and removal from the board
  • improper allotment of shares
  • making an inaccurate statement to s/h
  • payment of excessive bonuses and pension contributions
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6
Q

What kind of response can the court have to unfairly prejudicial conduct ? (5)

A
  • regulating the companies future conduct
  • Authorising formal proceedings
  • Injunction
  • Shares of minority to be bought back
  • Altar articles
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7
Q

Is it ordinary or special resolution re allotment of shares?

A

Ordinary resolution (it’s nothing massive to issue new shares)

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8
Q

What is the General rule around companies purchasing shares

A

Can only do it out of distributable profits or proceeds of fresh issue made for purpose of financing a purchase

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9
Q

What is the method for reducing share capital for private and public companies?

A

Private

  • SR
  • solvency statement
  • 1 member with non-redeemable shares
  • copy of all of the above must be filed with Registrar

Public

  • SR
  • confirmed by court
  • creditors entitled to object
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10
Q

What are the rules around public companies giving financial assistance?

A
  • prohibited from giving financial assistance (loans, gifts, guarantor for a loan) at or before the time of an acquisition of shares

EXCEPTIONS

  • it’s not to do with the proposed acquisition
  • money lending institute (e.g. bank)
  • employees share scheme
  • making of loans to EMPLOYEES in good faith
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11
Q

What is the time frame around creation of fixed charges before insolvency?

A

6 months
If a fixed charge is created to secure a debt within six months before company becomes insolvent then it may be invalid as a preference

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12
Q

What charges can companies deal with (as in access, dispose)?

A

Can deal with floating charges up to the point of crystallisation

Cannot deal with fixed charges - has to ask the charge holder (the one who got the debenture)

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13
Q

What is the procedure of an individual voluntary agreement agreement?

A
  • Application for an interim order by the nominee (qualified IP)
  • Then there is a moratoriam in place
  • The meeting of creditors must be called within 14 days of the notice
  • 75% acceptance is needed
  • supervisor is appointed to ensure things a gwaan

It’s a way of avoiding bankruptcy and it’s between the creditors and individual debtor - it lasts five years but you can still be a director

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14
Q

What is the procedure with a company voluntary arrangement? It is an alternative to administration

A
  • Meeting of companies creditors who must agree (75%)
  • Any disputes, the creditors view prevails-
  • if approved the CVA is binding on all unsecured creditors (though they can challenge the CVA on their interests or material irregularity)
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15
Q

In which cases do statutory rights of pre-emption apply

A

The allotment of equity securities for cash

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16
Q

Is a rights issue an obligationfor the members to take on additional shares?

A

No

They could sell their rights

17
Q

Any shares allotted must be paid up at least 25% of the nominal value together with 100% of any share premium payable-true or false

A

False for private

True for public

18
Q

What shares do the crest transfer system deal with?

A

Quoted shares (they are not obliged to permit paperless transgers(

19
Q

What is a debenture?

A

A document that records the terms of any loan

20
Q

What assets do a floating charge apply to

A

Current and future assets

21
Q

Within how many days must registration of a charge take place, after the charge is created?

A

You have 21 days to take CHARGE

22
Q

Who can apply to administration (out of court) and what is the process?

A

OUT OF COURT
- directors (give 5 DAYS notice) with notice of appointment and declaration that it’s likely to be insolvent and statement and consent from administrator (3)

 or QFCH (give 2 DAYS notice) and give notifies of appointment, statutory declaration about lawfulness of appointment and the charge and statement and consent from administrator (3)
As long as no pending petitionsand not in administration
23
Q

Can accredit to pursue recovery of the debt from a company that has been placed in administration?

A

Yes but it must obtain the consent of the administrator or the court

24
Q

Can charge holders enforce their charge without obtaining the consent of the administrator or the court?

A

No! Only with consent of administrator or court

25
Q

Who does the declaration of solvency need to be made by?

A

The majority of the directors provided there are two or more directors

26
Q

Do you creditors play any part in the members voluntary liquidation?

A

No as the company is solvent

27
Q

What powers does the administrator have?

A

Loads same as directors but a little bit more

28
Q

Are employees automatically dismissed when a liquidator is appointed?

A

Yes but not when an administrator is appointed

29
Q

What charges all transactions or debts incurred are invalidated? (4)

A
  • charges not registered within 21 days
  • transactions at an undervalue in the 2 years prior to liquidation
  • preferences given 6 months (unconnected person) or 2 years (connected person) (as in charges)
  • floating charges created within 12 months (2 years if connected person)
30
Q

When do you ring fencing provisions apply in favour of unsecured creditor?

A

When amount available for distribution is a least £10,000

31
Q

When does a personal bankruptcy order occur? What do they consider?

A
  • debts less than £40k
  • debtors estate is worth more than £4K
  • debtor has not been made bankrupt or had an IVA with creditors in 5 years
32
Q

What is the procedure re unlisted shares and transfer of shares? Registration and pre registration?

A

Pre-registration - transferor holds shares as trustee but can still vote as a member until shares are paid for by the transferee

Registration by co (stock transfer form and share certificate) - transferor ceases to be a member and transferee acquires rights

33
Q

What happens if company doesn’t follow procedures re: unlisted shares and transfer of shares?

A

Can refuse to register but must provide notice of refusal WITH REASONS WITHIN 2 MONTHS

Transferee is entitled to dividend or return of capital on winding up but cannot exercise members rights

Failure to comply - it’s an offence and officers are fined

34
Q

Do accounts have a duty to report suspicion of money laundering when:
A) acting as an insolvency practitioner
B) offences committed by third party and not client

A

Yes in both cases

35
Q

When do claims for unfair dismissal start to be actioned?

A

Effective date of termination will be X months when the employment terminates

36
Q

Is the employer obliged provide a written statement of the reasons for dismissal?

A

No unless the employee requests one within 14 days of his dismissal

Law (8 decks)

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