ICAEW Mock

Question 1

A trustee in bankruptcy served a notice of disclaimer in relation to a mound of waste illegally dumped upon a parcel of agricultural land. The land had vested in the trustee in bankruptcy pursuant to s.306 Insolvency Act 1986.
The disclaimer is
a valid
b valid if the court so orders
c invalid
d invalid if the court so orders

Answer 1

a valid

Question 2

ROT Creditor - If company enters administration after supply of goods but before payment of monies, can ROT officers repossess the goods?

Answer 2

No

Question 3

ROT Creditor - If company enters into Compulsory Liquidation after supply of goods but before payment of monies, can ROT officers bring proceedings to recover goods?

Answer 3

No

Question 4

If a liquidator (being a qualified Insolvency Practitioner) of a company in a compulsory winding up ceases to act in that role, the Official Receiver will automatically become the liquidator?

Answer 4

Yes

Question 5

True or False
The administrator of a company does not generally owe any duty to individual creditors.

Answer 5

True

Owes a duty to general body of creditors, NOT individual creditors

Question 6

True or False
An administrator is an officer of the court?

Answer 6

True

Question 7

Liquidators in compulsory liquidations and trustees in bankruptcy must pay into the ISA. When must payments must be made into the ISA?

Answer 7

Once every 14 days (since last time paid in, not receipt of funds)
OR
immediately without deduction if £5,000 or more has been received

Question 8

Can voluntary liquidators use the ISA?

Answer 8

No

Question 9

Can compulsory liquidators or trustees open local bank accounts?

Answer 9

Only with an application to secretary of state for permission

Question 10

Is it the court that will make the bankruptcy order assuming that the debtor has completed the application satisfactorily?

If the debtor wants an interim order, do they need to apply to court?

Answer 10

No

Application goes to adjudicator

No - (tis is from mock, the text book isnt clear!!)

Question 11

The effect of a disclaimer regarding a piece of contaminated land under s.178 Insolvency Act 1986 is to?

Answer 11

release the company from any liability regarding the land

Question 12

Mouse Ltd has given a first registered charge of its freehold property to Lisbon Bank which has been duly registered. The property was purchased for £455,000. Lisbon has advanced a loan of £400,000 to Mouse Ltd secured against the charge. Mouse Ltd has an overdraft of £55,000 with Lisbon.
Lisbon has a personal guarantee in respect of all the borrowings of Mouse Ltd from Mr Garton, a director of Mouse Ltd. Mr Garton’s account with Lisbon is in credit by £20,000.
Due to environmental contamination, the market value of the charged land is now £25,000. The bank wants to pursue Mr Garton under the terms of his guarantee.
What is the amount (in pounds) for which the bank would be advised to serve a statutory demand on Mr Garton, ignoring costs and interest?

Answer 12

410,000

Question 13

Pearl intends to propose an individual voluntary arrangement to her creditors under the terms of which all her creditors will be offered payment of 50% only of their outstanding debts.
Which two of the following cannot be bound by the arrangement without their individual consent?
✓Pearl’s sole employee, who is owed £500 for last month’s unpaid wages
✓The local authority, which is owed £30,000 for unpaid business rates
✓Pearl’s bank, which has a mortgage over her house and is owed £25,000
✓HMRC, which is owed £40,000 in unpaid VAT

Answer 13

✓Pearl’s sole employee, who is owed £500 for last month’s

✓Pearl’s bank, which has a mortgage over her house and is owed £25,000

Question 14

Rufus was appointed administrator of a company by a qualifying floating charge holder. The notice of appointment was filed at court on 2 May 20X1. The court duly sealed the notice and endorsed it with the date and time of filing. Rufus received a copy of the notice on 3 May 20X1.
What is the latest date on which the Registrar of Companies must receive notice of Rufus’s appointment?

Answer 14

10 May 20X1

7 days from when administrator receives the sealed documents of notice of appointment

Question 15

Hallie is in partnership with Kathryn. The partnership business is insolvent. The partners have decided to wind it up.
Which of the following statements is not correct?
1 The partners can petition for the winding up of the partnership as an unregistered company with no bankruptcy petitions presented against the individual partners
2 The partners can petition for the winding up of the partnership as an unregistered company where bankruptcy petitions are also presented against all the individual partners
3 The partners can petition for bankruptcy orders against themselves individually. A formal winding-up order of the partnership as an unregistered company will also be necessary otherwise the trustee in bankruptcy will have no authority to wind up the partnership
4 The partners can petition for bankruptcy orders against themselves individually. A formal winding-up order of the partnership as an unregistered company will not need to be made as the bankruptcy orders will permit the trustee in bankruptcy to wind up the partnership

Answer 15

1 true
2 true
3 false
4 true

Question 16

On 4 June 20X1 Nigel obtained an interim order under s.253 Insolvency Act 1986. Serena is to act as nominee in relation to Nigel’s proposed individual voluntary arrangement. Unless extended by the court, by what date must Serena report to the court on the viability of Nigel’s proposed voluntary arrangement?

Answer 16

18 June 20X1

Question 17

Bankrupt has a right of occupation of any personal under 18 has their own with the bankrupt, if they have been living with them for what time period?

Answer 17

If the under 18 year old has been living with them at the time of presentation of petition.

Question 18

True or false
An administrative receivership commences at the moment the instrument of appointment is received by the administrative receiver.

Answer 18

True

Question 19

True or false
The instrument of appointment must be accepted in writing by the administrative receiver by the end of the next business day.

Answer 19

False - can be accepted orally by next working day and in writing within 5 business days

Question 20

Shaula Ltd is subject to a company voluntary arrangement with a moratorium under Schedule A1 Insolvency Act 1986.
If it wishes, can Shaula Ltd dispose of property subject to a charge?

Answer 20

No

Question 21

True or False
A nominee of a company voluntary arrangement (CVA) proposal who chairs the creditors’ meeting convened to consider the proposal can be personally liable if she negligently admits debts for voting purposes that should have been excluded.

Answer 21

True

Question 22

Landers Bank loaned money to Radium Ltd and the bank was granted a fixed charge over assets of Radium Ltd. Radium Ltd, who is in default under the terms of the loan, has the benefit of a moratorium while a proposal is being prepared and put to creditors for a CVA.
Is the bank able to apply to the court to challenge a decision made by the nominee while the company is subject to the moratorium?

Answer 22

Yes

Question 23

To whom should the Liquidator send the account to first - the members or the Registrar of Companies?

Answer 23

The members

Question 24

True or False
The fact that the company is balance sheet insolvent does not preclude the directors from swearing the declaration of solvency.

Answer 24

True

Question 25

True or False
If the directors making the declaration have no reasonable grounds for the opinion stated they may be liable to serve a term of imprisonment.

Answer 25

True