Forms of Insolvency Flashcards
What is the most common rescue route?
Administration
What is the most common rescue route?
Administration
Who is an Administrator appointed by?
Creditors
What legislation is relevant to Administration?
The Enterprise Act 2002
What is appointed by creditors to realise assets or repay debts?
An Administrative Receiver or LPA Receiver
Who commences the process for Administration?
The company, its lenders or creditors
What is the purpose of Administration?
To create a period of protection for the company in order for the Administrator to deal with the company’s assets in the most appropriate way.
What is the period of protection known as?
a moratorium
What does a moratorium do?
Restricts the actions which can be taken against the company whilst it is in place.
What happens to the Directors of a company when it does into Administration?
They remain appointed but their powers cease.
What must the administrator do within 8 weeks?
Send proposals to creditors.
What are the three most common proposals made by Administrators?
Pre-pack business sale
Administration trading
Close down and wind up
What happens if a tenant goes into administration in terms of rent?
Actions open to landlord are limited due to the moratorium.
Can claim an equivalent amount of rent from administrator if it is still being paid.
Or Administrator may seek consent to an assignment of lease.
What is used when a company defaults in payment to a lender who is secured by a fixed charge?
Receivership
What is appointed by creditors to realise assets to repay debts?
an Administrative Receiver or LPA Receiver
A Receiver takes control of the company and _____ its assets, often by selling the business as a going concern with a view to repaying the lender.
Realises
What is appointed when a company defaults in payment to a lender who is secured by a property mortgage?
LPA Receiver
What is a contract between a company and its creditors for when a company is insolvent but the directors believe it has a viable future with financial restructuring?
Company Voluntary Arrangement
What does a company appoint in respect of a CVA to supervise and oversee the implementation of the proposed strategy?
Insolvency practitioner as a nominee
What does the company agree under a CVA?
Terms to repay accrued debts
What percentage of creditors must approve a CVA?
75%
What does pre-pack administration allow directors of a company to do?
Buy out and retain elements of the business which are trading well and place the remainder of the company into administration.
Pre-pack administration has become a popular route for _____ ________ to use.
Major retailers
What does a landlord need to do if a tenant becomes insolvent?
READ THE LEASE - check whether rent deposit, previous tenant liable or guarantor.
Check monies owing - insurance, service charge, rent
Ensure property insured
Make contact with insolvency practitioner and submit a claim for arrears.
Make an application for rent if still occupied.
Empty rates and management if vacant?
Who is an Administrator appointed by?
Creditors
What legislation is relevant to Administration?
The Enterprise Act 2002
What is appointed by creditors to realise assets or repay debts?
An Administrative Receiver or LPA Receiver
Who commences the process for Administration?
The company, its lenders or creditors
What is the purpose of Administration?
To create a period of protection for the company in order for the Administrator to deal with the company’s assets in the most appropriate way.
What is the period of protection known as?
a moratorium
What does a moratorium do?
Restricts the actions which can be taken against the company whilst it is in place.
What happens to the Directors of a company when it does into Administration?
They remain appointed but their powers cease.
What must the administrator do within 8 weeks?
Send proposals to creditors.
What are the three most common proposals made by Administrators?
Pre-pack business sale
Administration trading
Close down and wind up
What happens if a tenant goes into administration in terms of rent?
Actions open to landlord are limited due to the moratorium.
Can claim an equivalent amount of rent from administrator if it is still being paid.
Or Administrator may seek consent to an assignment of lease.
What is used when a company defaults in payment to a lender who is secured by a fixed charge?
Receivership
What is appointed by creditors to realise assets to repay debts?
an Administrative Receiver or LPA Receiver
A Receiver takes control of the company and _____ its assets, often by selling the business as a going concern with a view to repaying the lender.
Realises
What is appointed when a company defaults in payment to a lender who is secured by a property mortgage?
LPA Receiver
What is a contract between a company and its creditors for when a company is insolvent but the directors believe it has a viable future with financial restructuring?
Company Voluntary Arrangement
What does a company appoint in respect of a CVA to supervise and oversee the implementation of the proposed strategy?
Insolvency practitioner as a nominee
What does the company agree under a CVA?
Terms to repay accrued debts
What percentage of creditors must approve a CVA?
75%
What does pre-pack administration allow directors of a company to do?
Buy out and retain elements of the business which are trading well and place the remainder of the company into administration.
Pre-pack administration has become a popular route for _____ ________ to use.
Major retailers
What does a landlord need to do if a tenant becomes insolvent?
READ THE LEASE - check whether rent deposit, previous tenant liable or guarantor.
Check monies owing - insurance, service charge, rent
Ensure property insured
Make contact with insolvency practitioner and submit a claim for arrears.
Make an application for rent if still occupied.
Empty rates and management if vacant?
