Insolvency

Question 1

What are the basic objectives of insolvency law in regards to the specifically bankruptcy of individuals

Answer 1

To protect the insolvent from harrasment from creditors, To enable a fresh start in the case of less blame worthy cases and to reduce the indebtedness with regards to circumstances and family

Question 2

What are the basic objectives of insolvency law in regards to specifically coorporate insolvency

Answer 2

To perserve the business or salvagable parts of it (but not nececarially the company), and to impose personal liability if it is deemed that limited liability has been abused

Question 3

What are some general objectives of insolvency law

Answer 3

To ensure that all creditors participate on equal footing and act fairly although statuatory creditors have priority, to impartially investigate the circumstance and make sure that mesures taken are in the interest of society and to recover any assets improperly dealt with

Question 4

what is pari passu

Answer 4

That equal creditors should be on equal footing

Question 5

It is illegual for people to make a contract where they promise to transferr ownership of specific property to a specific creditor in the case of bankrupcy

Answer 5

Yes, that would be against parri passu

Question 6

What is balance sheet insolvency

Answer 6

if a persons assets are lesser than their liabilities

Question 7

What is commercial insolvency

Answer 7

A cash/liquidity shortage sever enough not to be able to repay debts

Question 8

What is ultimate insolvency

Answer 8

The result if a persons assets have been ceased and the creditors have not aquired all they want

Question 9

What is considered insolvent under the Sale of Goods act 1979

Answer 9

The inability to pay creditors when a payment becomes due

Question 10

What is a country court administration order

Answer 10

A court representative may oversee the payment of a debt less than 5000£ if an individual is insolvent

Question 11

In the case of individual insolvency an individual volentary arrangement (IVA) may be overseen by the court

Answer 11

True

Question 12

What is DRO

Answer 12

A debt relief order, when a person is less the 20000£ in debt, has less than 1000£ in assets and a disposable income smaller than 50£ a month and has not been insolvent for a year their debt may be forgiven by the government

Question 13

What is a bankruptcy application

Answer 13

A person may declare themselves bankrupt online or a creditor may take the case to court, declaring the person as insolvent

Question 14

A bankruptcy order cannot be made for a person in less than 5000£ in debt

Answer 14

true

Question 15

If a person can repay their debt in less than 3 weeks after a bankruptcy order they will no longer be benkrupt

Answer 15

True

Question 16

Employees have priority as creditors

Answer 16

True

Question 17

An insolvent individual has no right to books, furniture or housing required for the survival of their family

Answer 17

False

Question 18

An insolvent individual cannnot be a company director and have limited ability to take out credit

Answer 18

True

Question 19

An individual insolvent is usually bankrupt for 3 years after which all debts are considered resolved

Answer 19

True

Question 20

What is a CVA in corporate bankrupcy

Answer 20

A corporate volentary arrangement where an insolvent company and their creditors come to an arangement, only available for small companies that are not insurance companies or banks as per the 1985 companies act

Question 21

What are the objectives of an administration in corporate insolvency

Answer 21

An administer may be appointed by the court to rescue the company as a going concern or if that not succeeds achive a better result than if the company would be wound up and if all else fails realising property to pay preferential creditors

Question 22

What is a receiver in corporate insolvency law

Answer 22

A person tasked with retriving the property of the insolvent

Question 23

A receiver can only be appointed by a charge-holder

Answer 23

No, also the court

Question 24

Most of the time an administrator cannot be a receiver

Answer 24

True

Question 25

A receiver may be put in charge of the insolvent company to stear it out of debt for the interest of the charge-holder

Answer 25

True

Question 26

The receiver need to notify the company management in advance before their property is sold

Answer 26

False

Question 27

How is a receiver different from an agent

Answer 27

A receiver has the right to change the legual relations of a company like an agent but unlike one they do not owe their loyalty to the one who’s company they have power over but rather the charge holder

Question 28

A reciver does not owe a duty to act in the interest of a company when selling its property for parts but he owes a duty of dilligence when stearing the company out of debt

Answer 28

True, if there is some obvious thing like taking discounts they owe the company to act reasonably

Question 29

A receiver should act in the interest of all the creditors

Answer 29

No, only the charge holder

Question 30

Administration is the most popular insolvency prodedure

Answer 30

True

Question 31

What is another word for winding up

Answer 31

liquidation

Question 32

What is a wind up

Answer 32

When a liquidator is apointed to sell all the companies assets for cash, the going concern is not their concern and while the company may run for a while its fate is sield

Question 33

What is a volentary windup

Answer 33

When it is not ordered by the court, if the directors can verify that all creditors will be payed they may controle the procedure (members volentary windup) otherwise a liquidator will be appointed by the creditors (creditors volentary windup).

Question 34

Can a company pay of its debts, give security over property to creditors or sell an asset after petitioning for a windup

Answer 34

No, not unless the court allows it (no disposition of the companies property may occur)

Question 35

May a court order the avoidance of transactions commenced before the petition for windup

Answer 35

Yes, transaction at undervalue, transactions giving preference to a particular creditor, transaction defrauding (avoiding specific) creditors, extortionate credit transactions and floating charges not taken at a time of solvency

Question 36

What is misfeasance

Answer 36

The right to claim compensation for a breach of duty even upon liquidation (an exception to the no disposition rule)

Question 37

May third party tradors or directors who trade wrogfully or fradulently to defraud creditors be forced to contribute to the liquid pool upon liquidation

Answer 37

True