SGS 24 (Insolvency) Flashcards
Describe a CVA
an arrangement between a company and creditors to try to restructure or compromise the company’s unsecured liabilities and often results in an extended timetable for repayment.
Majorities to pass a CVA?
3/4 of credits who respond to the proposal.
Simple majority of unconnected creditors
OR to approve terms of CVA.
Who does a CVA affect?
dissenting and abstaining unsecured creditors but NOT secured creditors.
Who is a nominee?
an insolvency practitioner who assist in preparing the draft CVA, corresponds with creditors. If CVA approved, nominee becomes supervisor and implements it.
What are the three objectives of administration in order of their respective priorities?
rescue company as a going concern.
achieve a better result for creditors than would be achieved by being wound up without first going into administration.
realising property to make a distribution to secured or preferential creditors.
What is a moratorium and when does it come into force?
on the company entering into administration.
Temporarily halts any: legal proceedings, winding up order and self-help remedies without consent of administrator or court.
Three methods to appoint an administrator?
Out of court (directors)
Out of court (QFCH)
Court procedure (unsecured creditors)
Out of court procedure to appoint an administrator by a director?
File notice of intention to appoint
serve notice on QFCH and give 5 days for QFCH to appoint own.
If not, directors appoint their own within further 5 day window.
What is a fixed charge receivership?
Holder of a fixed charge can appoint one.
Sells property subject to fixed charge and restore proceeds to holder.
Who takes pole position?
Anyone with first-ranking debenture security over whole or substantially the whole of company’s property.
What is a QFC?
QFC = floating charge over the whole or substantially the whole of the company’s property (alone or in conjunction with other security) and the charging document purports to give the holder e the right to appoint an administrator or an administrative receiver. The holder of such is a QFCH.
Why are AR’s not relevant usually?
They do not apply after the ‘relevant date’ which is 15/09/2003.
what is pre-pack administration?
planned administration, buyer already identified and terms of sale negotiated. Sale effective following administrator’s appointment.
Goodwill and continuity of business preserved.
Three types of liquidation?
CVL
MVL
Compulsory
CVL?
Trading ceases, liquidators c sell assets.
Insolvent winding up.
Initiated by a company by SR (no court procedure)
Liquidator appointed.
