What is the primary objective of an administration order in insolvency law?

Answer options:

To immediately liquidate the company's assets and pay creditors.

To rescue the company as a going concern.

To investigate and prosecute directors for fraudulent trading.

To ensure unsecured creditors are paid in full before secured creditors.

How to approach this question

Identify the statutory hierarchy of objectives for an administrator.

Full Answer

B.To rescue the company as a going concern.✓ Correct

Under the Insolvency Act 1986, the primary objective of administration is to rescue the company as a going concern. If that is not reasonably practicable, the secondary objective is to achieve a better result for creditors than would be likely if the company were wound up.

Common mistakes

Confusing administration (a rescue mechanism) with liquidation (a terminal process).

Question 22 All questions Question 24

Practice the full ACCA LW — Corporate and Business Law Practice Exam 1

60 questions · hints · full answers · grading

What is the primary objective of an administration order in insolvency law?

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA LW — Corporate and Business Law Practice Exam 1

More questions from this exam