Module 4 - Phoenix Companies And Antecedent Transactions Flashcards
Three exceptions for when a Director can use a similar name for a Phoenix Company
Where the IP has arranged for the transfer of some or all of the Company’s assets;
The Court can give leave to use the name;
Where the successor company was known by the same or similar name for 12 months prior to the date the insolvent company went into Liquidation
What is the principal duty of a Liquidator / Trustee in Bankruptcy?
Maximise realisations to creditors
What is SIP 13?
The sale of assets to a Director or a connected party
What is Section 238?
Transactions at an Undervalue
What are the 3 things to prove for Transactions at un Undervalue?
Transaction was either a gift (nil consideration), or significantly less consideration given;
Anterior Period / Relevant Time (2 Years from the commencement of Winding Up);
Company was insolvent at the time of the transaction, or rendered insolvent as a result of the Transaction (if Connected, insolvency is presumed)
Define Connected Party
Connected by blood or law
What are the 3 parts of the defense against Transactions at an Undervalue?
Good faith (the Company was insolvent good faith when selling asset);
Purpose of the Business (the transaction was for the purpose of doing the business);
Reasonably believed in the best interest of the Company
What is the Remedy of TUV?
Restoration - place the parties into the position they would have been in had that transaction never taken place (against Beneficiary);
Misfeasance - breach of fiduciary duty by Directors
What is Section 239?
Preferences
What 3 things do you need to prove for a Preference claim?
Desire (Influenced by Desire to place creditor in Better Position had preference not been given) / (if connected party, desire is presumed);
Anterior Periods / Relevant Timeframe (Unconnected 6 months, Connected 2 Years);
Prove insolvency (never presumed in Preferences)
What is the defense against Preferences?
THERE IS NONE HAHA GOTCHA
What is Remedy for Preferences?
Restoration against Beneficiary;
Misfeasance v Director
What is 423?
Transactions Defrauding Creditors
Who can take on 423 Claims?
Victim (Creditor / Director/ Employee / Member / Officeholder);
What 2 things do you need to prove for Transactions Defrauding Creditor?
Gift or Significantly Less Consideration given;
Intent - prejudice interests of the victim (Criminal proof - beyond reasonable doubt)
What is the insolvency test for Transactions Defrauding Creditors?
THERE IS NONE - HAHA GOTCHA
What is the anterior period for transactions defrauding creditors?
THERE IS NONE - HAHA GOT YA AGAIN
What is the defense against Transactions defrauding Creditors?
No defense
Remedy for Transactions Defrauding Creditors?
Restoration - Beneficiary;
Misfeasance - Director
What is Section 245?
Floating Charge Avoidance
What are the 2 things to prove for Avoidance of Floating Charge if it is an UNconnected party?
Anterior Period - 12 months from commencement of winding up;
Insolvency at time of creating the floating charge
What are the 2 things to prove for Avoidance of Floating Charge if it is an UNconnected party?
Anterior Period - 12 months from commencement of winding up;
Insolvency at time of creating the floating charge
How many things to prove if floating charge is made to connected party?
One;
Charge was made within an anterior period of 24 months
What is Section 244?
Exorbitant / Extortionate Credit Transactions
What is the Remedy for Extortionate Credit Transactions?
Court can do anything it sees fit.
What is the Anterior Period for Extortionate Credit Transactions?
3 Years
Which two sections refer to Dispositions?
239 - Before Petition;
127 - After Petition
What options are available to the Landlord with a lease?
Forfeiture - right of landlord to terminate lease;
Agree to Assign - sign it onto a new sub lessee;
Force Disclaimer;
Use CRAR for Arrears of Rent
What can a Liquidator do about a Lease?
Do Nothing;
Request assignment;
Disclaim;
Surrender Lease
What is Disclaiming the Lease?
Effectively giving it back.
What is CRAR?
Commercial Rent Arrears Recovery
How many days notice does a landlord have to give the tenant of intent to use CRAR?
7 days
What is the minimum amount of days rent you can claim under CRAR?
7 Days
What is the exempt limit for tools of the trade under CRAR?
£1,350
How long do items need to be held before they can be sold at public auction?
7 days
How do you stop CRAR?
WUC - The only action for a Liquidator is to negotiate with the landlord;
CVL - the only action for a Liquidator is to negotiate with the land
But actually - you can’t really stop it…
What is Execution?
A creditor enforcement action
What are the 3 stages of Execution
Entry and Seizure;
Sell the Property at Market Value;
When proceeds of sale are passed to the Creditor
Which 2 sections of Insolvency Act can stop Execution?
183 C - if notice reaches Creditor before execution is complete, it must be stopped and property passes to Liquidator
184 - if notice reaches HCEO before execution is complete, it must be stopped and property passes to Liquidator
What are the different ROT Clauses?
Simple Clause - payment received for those particular assets;
All Moneys Clause - payment received for all moneys owed to the particular creditor
