INSOLVENCY

INSOLVENCY

1. Procedures that aim to rescue the company (Corporate Rescue)

   • Administration
     • Purposes ( S. 8 together with para 3(1) of Sch B1, IA 1986
       • OBJ I : RESCUE THE COMPANY AS A GOING CONCERN
         • Administration may save the company itself, but in practice this is unusual
       • OBJ II : ACHIEVE A BETTER RESULT FOR THE COMPANY'S CREDITORS AS A WHOLE THAN WOULD BE LIKELY IF THE COMPANY WERE WOUND UP
         • more commonly obtained with the business saved by the administrator selling off the business to a purchaser but the company itself being wound up
       • OBJ III : REALIZING THE PROPERTY IN ORDER TO MAKE A DISTRIBUTION TO ONE OR MORE SECURED FOR PREFERENTIAL CREDITORS
   • Company Voluntary Arrangement (CVA)
     • Standard CVA with no moratorium
     • CVA with moratorium for small companies

2. Procedure that allows secured creditors to recover monies owned

   • Receivership
     • a mechanism by which a secured creditor can recover money owed by a company

3. Procedure that brings the company to an end

   • Liquidation (Winding up)
     • Compulsory Winding Up
     • Voluntary Winding Up
       • Members' Winding Up
       • Creditors' Winding Up
       • Liquidation's Committee
     • On Ground of Public Interest
       • Petitions presented by the Secretary of State
     • Powers of a LIQUIDATOR (Sch 4, IA 1986)
       • The ability to pay any creditors in full
       • The power to bring or defend legal proceedings on behalf of the company
       • The power to carry on the running of the business in order to achieve a more beneficial winding up
       • The power to sell any of the company's property

4. Avoidance of transactions entered into prior to the liquidation

   • Transactions at an undervalue s238
   • Voidable Preferences s239
   • Extortionate Credit Transactions s244
   • Avoidance of floating charges s245

5. The personal liability of directors under INSOLVENCY ACT 1986

   • Fraudulent Trading s213
   • Wrongful Trading s214
     • Re Produce Marketing Consortium Ltd [1989]
     • Re Hawkes Hill Publishing Co Ltd [2007]
   • Misfeasance Proceedings s212