ExpertEasy2 marksMultiple Choice
ACCA · Question 21 · Syllabus G: Insolvency law
The primary objective of an administration order under the Insolvency Act 1986 is to:
The primary objective of an administration order under the Insolvency Act 1986 is to:
Answer options:
A.
Immediately liquidate the company's assets to pay secured creditors.
B.
Rescue the company as a going concern.
C.
Investigate the conduct of the directors for fraudulent trading.
D.
Distribute the company's assets to shareholders.
How to approach this question
Recall the statutory hierarchy of objectives for an administrator.
Full Answer
B.Rescue the company as a going concern.✓ Correct
The administrator must perform their functions with the objective of: (a) rescuing the company as a going concern (the primary objective), or if that is not reasonably practicable, (b) achieving a better result for the company's creditors as a whole than would be likely if the company were wound up.
Common mistakes
Confusing administration (a rescue procedure) with liquidation (a terminal procedure).
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