Module 5

Question 1

What are the 4 Company rescue options?

Answer 1

CVA, Administration, Administrative Receivership, Scheme of Arrangement

Question 2

What percent of the vote do you need to approve a CVA proposal?

Answer 2

75%

Question 3

Advantages of a CVA

Answer 3

Company keeps control, Company can survive, Creditors are bound (except Secured), Enhanced return for Creditors, Small Company Moratorium, No CDDA, No Antecedent Transactions.

Question 4

“A flexible agreement to pay off debts over a defined period of time from future profits”

Answer 4

CVA - Company Voluntary Arrangement / Agreement

Question 5

“Preserving the goodwill of a Company”

Answer 5

Administration

Question 6

Advantages of an Administration

Answer 6

Continue to trade; Allows sale of the Business; Moratorium; Quick and Cheap(?); Flexible Exit Routes

Question 7

Date for Administrative Receivership?

Answer 7

15 September 2003

Question 8

Negatives of a CVA

Answer 8

75% creditor approval required; needs to be better than Liquidation, Liquidation happens if CVA fails

Question 9

Negatives of an Administration?

Answer 9

Directors lose control; Fees can be high; must meet an objective; CDDA / Antecedents will be pursued

Question 10

Negatives of Administrative Receivership

Answer 10

Only available on floating charges before 15 September 2003; CDDA on Directors; no Moratorium; Personal Liability for the IP

Question 11

Negatives of a Scheme of Arrangement

Answer 11

Requires support of all creditors, members, and shareholders

Question 12

4 Types of Bank Rescue Options

Answer 12

Administration
Administrative Receivership
Fixed Charge Receivership
Law of Property Act Receivership

Question 13

2 Rescue options for a Bank with a Floating Charge

Answer 13

Administration
Administrative Receivership

Question 14

2 rescue options for a Bank with a fixed charge

Answer 14

Fixed Charge Receivership
Law of Property Act Receivership

Question 15

What type of Rescue options do you NOT need to be an IP for?

Answer 15

Fixed Charge Receivership
Law of Property Act Receivership

Question 16

Advantages of a Fixed Charge / LPA Receivership

Answer 16

Sale of the fixed assets solely for the purpose of getting money back for the bank; Duty to the bank only; lower costs

Question 17

Disadvantages of Fixed Charge / LPA Receivership

Answer 17

Limited powers given in Statute; Can only deal with Assets in the Charge; no Moratorium; Directors may petition for Liquidation

Question 18

What are the Prior Considerations?

Answer 18

Engagement Letter; Qualified to Act; Money Laundering; Experience and Expertise; Ethical Considerations

Question 19

5 Main Principles of Ethical Code

Answer 19

Integrity; Objectivity; Professional Competency and Due Care; Confidentiality; Professional Behaviour

Question 20

5 Threats to Code of Ethics

Answer 20

Self-Interest; Advocacy; Self-Review; Intimidation; Familiarity

Question 21

What is the time period for a Self-Review threat?

Answer 21

3 Years

Question 22

12 Things to be an IP

Answer 22

Be an Individual;
Pass the JIEB;
Member of Regulatory Body;
Meet the Hours and Training thresholds;
Have a General Bond (250,000)
Have a Specific Bond (assets of the case)
Not Disqualified under CDDA;
Must not be currently Bankrupt;
Not incapacitated under Mental Health Act;
Must maintain knowledge and skill (CPD)
Regulatory Body carry out reviews

Question 23

Decision to Trade - 8 Key Considerations

Answer 23

Stock / Supply;
Do we have employees willing to work;
Do we have equipment;
Environment / Health & Safety
Landlord / Lease;
Utilities;
Funding;
Contracts / Customers

Question 24

Moratorium - 8 Things that are Stopped

Answer 24

Retention of Title / Repossession;
Lien;
Bailiff Visits;
Receiver Appointment;
Winding Up Petition;
County Court Judgement
Landlord Forfeiture
Commercial Rent Arrears Recovery

Question 25

What is the Case Study for Court Consideration regarding Moratoriums?

Answer 25

Atlantic Computers

Question 26

CRAR - Commercial Rent Arrears Recovery. How much notice must they give and how much rent must be owed?

Answer 26

7 Days in both

Question 27

“A provision in a contract for the sale of goods that the title of the goods remain vested in the seller until certain obligations (usually payment of the purchase price) are fulfilled by the buyer”

Answer 27

Retention of Title

Question 28

2 Types of RoT Clauses

Answer 28

Simple Clause; All Monies Clause

Question 29

Define All Monies Clause

Answer 29

“An all monies clause reserves title to goods supplied by the supplier until the purchaser has paid not only for those specific goods; but also for any other goods supplied by the supplier to the purchaser, and has repaid any other sums due to the supplier”

Question 30

Define Simple Clause

Answer 30

“A simple clause will state that legal ownership, or title, to the goods will not pass from the seller to the buyer until the buyer has paid for the goods”

Question 31

Validity of a Claim

Answer 31

Must be identifiable goods (simple clause);
Goods have been supplied by Creditor;
Not the same product supplied (has it been mixed etc);
Altered from its original shape (scaffold pole cut in half);
Has it been incorporated? Engine components (Plasmatrack) / Can it be safely removed;