Module 5 - Administrations And CVAs Flashcards
What are the 4 Company rescue options?
CVA, Administration, Administrative Receivership, Scheme of Arrangement
What percent of the vote do you need to approve a CVA proposal?
75%
Advantages of a CVA
Company keeps control, Company can survive, Creditors are bound (except Secured), Enhanced return for Creditors, Small Company Moratorium, No CDDA, No Antecedent Transactions.
“A flexible agreement to pay off debts over a defined period of time from future profits”
CVA - Company Voluntary Arrangement / Agreement
“Preserving the goodwill of a Company”
Administration
Advantages of an Administration
Continue to trade; Allows sale of the Business; Moratorium; Quick and Cheap(?); Flexible Exit Routes
Date for Administrative Receivership?
15 September 2003
Negatives of a CVA
75% creditor approval required; needs to be better than Liquidation, Liquidation happens if CVA fails
Negatives of an Administration?
Directors lose control; Fees can be high; must meet an objective; CDDA / Antecedents will be pursued
Negatives of Administrative Receivership
Only available on floating charges before 15 September 2003; CDDA on Directors; no Moratorium; Personal Liability for the IP
Negatives of a Scheme of Arrangement
Requires support of all creditors, members, and shareholders
4 Types of Bank Rescue Options
Administration
Administrative Receivership
Fixed Charge Receivership
Law of Property Act Receivership
2 Rescue options for a Bank with a Floating Charge
Administration
Administrative Receivership
2 rescue options for a Bank with a fixed charge
Fixed Charge Receivership
Law of Property Act Receivership
What type of Rescue options do you NOT need to be an IP for?
Fixed Charge Receivership
Law of Property Act Receivership
Advantages of a Fixed Charge / LPA Receivership
Sale of the fixed assets solely for the purpose of getting money back for the bank; Duty to the bank only; lower costs
Disadvantages of Fixed Charge / LPA Receivership
Limited powers given in Statute; Can only deal with Assets in the Charge; no Moratorium; Directors may petition for Liquidation
What are the Prior Considerations?
Engagement Letter; Qualified to Act; Money Laundering; Experience and Expertise; Ethical Considerations
5 Main Principles of Ethical Code
Integrity; Objectivity; Professional Competency and Due Care; Confidentiality; Professional Behaviour
5 Threats to Code of Ethics
Self-Interest; Advocacy; Self-Review; Intimidation; Familiarity
What is the time period for a Self-Review threat?
3 Years
12 Things to be an IP
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
Decision to Trade - 8 Key Considerations
Stock / Supply;
Do we have employees willing to work;
Do we have equipment;
Environment / Health & Safety
Landlord / Lease;
Utilities;
Funding;
Contracts / Customers
Moratorium - 8 Things that are Stopped
Retention of Title / Repossession;
Lien;
Bailiff Visits;
Receiver Appointment;
Winding Up Petition;
County Court Judgement
Landlord Forfeiture
Commercial Rent Arrears Recovery
What is the Case Study for Court Consideration regarding Moratoriums?
Atlantic Computers
CRAR - Commercial Rent Arrears Recovery. How much notice must they give and how much rent must be owed?
7 Days in both
“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”
Retention of Title
2 Types of RoT Clauses
Simple Clause; All Monies Clause
Define All Monies Clause
“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”
Define Simple Clause
“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”
Validity of a Claim
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;
