01. HAT LTD
Hat Ltd is a coach tour company. Lately, it leased a fleet of five brand new 'Executive style' coaches ahead of an anticipated increase in business. The coaches cost a total of £25,000 a month to lease, and on top of this, the business also has to pay its overheads including staff costs – a total of £20,000 per month. The increase in business did not materialise and Hat Ltd is only generating £30,000 of revenue per month. The coach trips are going out on average 50% full of passengers.
William, the Finance Director is increasingly concerned about the situation and has called a meeting of the board of directors to discuss the matter and the possibility of putting the business into administration.
Which TWO of the following statements regarding administration orders are correct?
A. Administration orders put an insolvency practitioner in control of the company.
B. Administration orders can be used to realise property in order to make a distribution to creditors.
C. Administration orders are granted by the Registrar of Companies.
D. Administration orders defend the company from its creditors while it is liquidated.
Identify which of the following documents William would be essential to submit in order to apply for an administration order for Hat Ltd.
A. Statement of insolvency
B. Latest set of financial statements
C. Latest set of financial statements
Would an administration order be granted to Hat Ltd and why?
02. HARRY LTD
The directors of Harry Ltd have recently appointed an administrator to help rescue the company from its financial difficulties. The directors are aware that a consequence of administration is that the powers of the board are suspended and the administrator assumes the day-to-day management of the company. However, the directors are unsure whether they are legally required to make any parties aware of the appointment.
Which TWO of the following are legal duties of an administrator as soon as is reasonably practicable after appointment?
A. They can do anything necessary for the management of Harry Ltd.
B. They must obtain a full list of Harry Ltd’s creditors and send notice of appointment to each of them.
C. They must send notice of appointment to the Registrar, within 21 days of appointment.
D. They can pay out monies to unsecured creditors of Harry Ltd without the approval of the court.
Which of the following parties can appoint or not appoint an administrator for Harry Ltd apart from its directors?
A. The court in response to a creditor’s petition.
B. The floating charge holder over Harry Ltd’s assets.
D. The shareholders of Harry Ltd.
03. SOMU LTD
Somu Ltd is a private trading company registered in 2019. The company has enjoyed success through the years, but now the shareholders believe it is the right time to discontinue the operation and bring the company to end. The company has net assets of approximately £800,000 and its only liability is a secured bank loan of £50,000.
What kind of a resolution will be passed by the members of Somu Ltd in order to wind up the company?
At which point does a members' voluntary liquidation commence?
State whether True or False.
A. The solvency of the company will determine whether a voluntary liquidation is a members' or creditors' voluntary liquidation.
B. Where the company has failed to pay its creditors for three months, the court will order the compulsory liquidation of a company on the just and equitable ground.