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Business Law > Insolvency Law > Flashcards

Insolvency Law Flashcards

1
Q

An administrator must have a specific qualification. What is this qualification?

A

An administrator must be a qualified insolvency practitioner.

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2
Q

A liquidator must have a specific qualification.

What is this qualification?

A

A liquidator must be a qualified insolvency practitioner.

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3
Q

What is an alternative to liquidation for a company in financial difficulties which is used to safeguard the continued existence of the company?

A

Administration

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4
Q

Who is the Official Receiver?

A

The Official Receiver is appointed by the Courts as the Provisional Liquidator if the Courts grant a compulsory liquidation order.

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5
Q

What case resulted in the Courts granting a compulsory liquidation order on the grounds that the company was in fact a quasi-partnership?

A

Ebrahimi v Westbourne Galleries

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6
Q

What case resulted in the Courts granting a liquidation order due to a deadlock on the Board?

A

re Yenidje Tobacco Co. Ltd.

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7
Q

In re German Date Coffee Company, the Court granted a liquidation order on what grounds?

A

The Courts found that as the sub-statum of the company (the patent) no longer existed, it was just and equitable to dissolve the company.

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8
Q

A court may grant a liquidation under what 2 main grounds?

A
  1. On the grounds that it would be just and equitable

2. On the grounds that the company is unable to pay its debts as they fall due

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9
Q

A declaration of solvency is prepared under which form of liquidation?

A

Members’ voluntary liquidation

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10
Q

What criteria must be met for a private company to pass a written resolution to place the company into liquidation?

A

A majority of 75% must vote in favour of the resolution

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11
Q

What type of resolution is passed by members to put the company into liquidation?

A

A special resolution, which requires at least 75% majority voting in favour

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12
Q

The Court can direct a public company to be liquidated where that company has failed to obtain a trading certificate within 12 months of incorporation.
True or False?

A

True

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13
Q

What is the main difference between members’ voluntary liquidation and creditors’ voluntary liquidation?

A

The level of solvency
Members’ voluntary liquidation occurs when directors believe that the company is solvent, while creditors’ voluntary liquidation occurs when creditors believe that the company is insolvent.

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14
Q

What are the types of voluntary liquidation?

A

There are 2 types of voluntary liquidation - members and creditors.

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15
Q

Members’ voluntary liquidation is for solvent companies.

Is this statement true or false?

A

True.

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16
Q

Who can appoint an administrator without a court order?

A

Secured creditors, directors and members by resolution

17
Q

Is it a criminal offence for a director to make a declaration of solvency without having reasonable grounds?

A

Yes, punishable by fine or imprisonment

18
Q

What does the declaration of solvency include?

A

The company’s assets and liabilities as at the latest practicable date before the declaration was made

19
Q

Within how many days of making an order for compulsory winding up must a statement of affairs be delivered to the Official Receiver?

A

21

20
Q

A signed copy of the resolution for liquidation must be delivered to the Registrar within 15 days.
Is this statement true or false?

A

True

21
Q

What is administration?

A

Administration involves putting an insolvency practitioner in control of the company with a defined programme for rescuing the company from insolvency as a going concern

22
Q

How many statutory reasons are there for the courts to compulsorily wind up a company?

A

7

23
Q

How long can administration last?

A

Up to 12 months

24
Q

With a members’ voluntary liquidation, who approves the liquidator’s actions?

A

General meeting of members

25
Q

With compulsory liquidation, when is the liquidation considered started?

A

The date when the petition was first presented

26
Q

A liquidator’s main role is to wind up the company.

Is this statement true or false?

A

True

27
Q

The court-appointed Official Receiver has how many weeks to decide whether or not to convene separate meetings of creditors and contributories?

A

12

28
Q

Is the Declaration of Solvency a statutory requirement?

A

Yes

29
Q

What does the Declaration of Solvency state?

A

That the directors have made a full enquiry into the affairs of the company and are of the opinion that it will be able to pay its debts, within a specified period not exceeding 12 months

Business Law (8 decks)

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