Insolvency law: Corporate and personal Flashcards
What is administration?
- the aim to rescue a company as a going concern
- achieve a better result for creditors than liquidation
- realise property to pay one or more secured or preferential creditors
Who can appoint an administrator?
- a company
- directors
- one or more creditors
- qualifying floating charge holder
Within how many days must an administrator make their requirements for statements known and how long do the officers and employees have to comply?
- 7 days
- 11 days
How long does administration last?
Usually 12 months - can be extended with consent of court or by majority of creditors
What are the consequences of being under administration?
- administrator takes over power from directors
- moratorium in place
- assets subject to floating charge can be sold
- assets on fixed charge can be sold with approval of the court
- contracts of employment can be terminated
What is the role of a receiver?
Realisation of company’s assets which are then sold
Describe Company Voluntary Arrangements (CVA)
- alternative to winding up
- agreement between company and creditors setting on which debts are to be paid , and in what proportion
- members by simple majority or creditors by 75% majority must approve proposed CVA
- CVA binding on all unsecured creditors
- directors can apply for short moratorium
Who can propose a CVA nominee?
- company
- administrator
- liquidator
How long does CVA usually last?
3 - 5 years
What type of resolution needs to be passed for voluntary liquidation?
- special in most circumstances
- ordinary if period fixed for duration of company expires
When does a members’ and creditors’ voluntary wind up apply?
- members’ when company solvent
- creditors’ when company insolvent
Describe the members’ voluntary winding up process
- directors make declaration of solvency, pay debts in 12 months
- liquidator appointed by members
- statement of solvency
- liquidator reports to members
Describe the creditors’ voluntary winding up process
- insolvent company
- liquidator appointed by members and creditors
- statement of affairs
- liquidator reports to members and creditors
What are the possible grounds for petition on compulsory liquidation?
- plc not been issued trading cert within year of inc
- creditor owed >=£750 has served a written demand and not been paid in 3 weeks
- just and equitable if no other options by court
Who can petition for compulsory liquidation?
- the BIS
- a member (6 of last 18 months)
- creditor owed £750 and done written thing
Who is appointed as the liquidator in compulsory liquidation?
Official receiver
Who does the liquidator for compulsory liquidation report to?
Court
What charges can be avoided?
- charges not registered within 21 days
- floating charge created within 12 months of wind up (2 years if connected person)
- undervalued transaction within 2 years unless they can prove good faith, best for business
What is the order of people receiving their money upon liquidation?
- liquidators
- fixed charge
- employees
- floating charge
- unsecured creditors
- post-liquidation interest
- members dividends then capital
What is an individual voluntary arrangement (IVA)?
Alternative to bankruptcy, whereby an individual has an agreement with their creditors
Process for IVA
- individual appoints a nominee
- nominee must call creditors meeting
- creditors accept or reject proposals
- if accepted, supervisor appointed
- upon completion, all liabilities within are discharged
Who can petition for bankruptcy?
- individual
- unsecured creditor owed £750
- supervisor of an IVA
Process of bankruptcy
- petition received by courts
- pass a bankruptcy order
- become undischarged bankrupt
- trustee appointed to administer bankruptcy
- trustee requires creditors to prove their debts and will rank them
Request for individual bankruptcy will not be made when
- debts are
