ACCA · Question 60 · Insolvency law
Scenario: 'GeoThermal Grid Ltd' is facing severe financial difficulties. The directors realize the company cannot avoid insolvent liquidation, but they continue trading for six months, incurring £500,000 in new debts. Just before liquidation, they repay a £50,000 loan to the Managing Director's brother, while ignoring other creditors.
Question: What is the relevant 'look-back' time period for the liquidator to challenge the preference payment made to the Managing Director's brother?
Answer options:
6 months prior to the onset of insolvency.
1 year prior to the onset of insolvency.
2 years prior to the onset of insolvency.
5 years prior to the onset of insolvency.
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