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    PracticeACCAACCA LW — Corporate and Business Law Practice Exam 4Question 22
    Medium2 marksMultiple Choice
    Corporate and Business LawSection ASyllabus GInsolvency Law

    ACCA · Question 22 · Corporate and Business Law

    Under Schedule B1 of the Insolvency Act 1986, an administrator must perform their functions with the objective of rescuing the company as a going concern. If this primary objective is not reasonably practicable, what is the administrator's secondary objective?

    Answer options:

    A.

    Realising property in order to make a distribution to one or more secured or preferential creditors.

    B.

    Achieving a better result for the company's creditors as a whole than would be likely if the company were wound up.

    C.

    Investigating the conduct of the directors for fraudulent trading.

    D.

    Immediately selling the company's assets to the highest bidder.

    How to approach this question

    Recall the hierarchy of objectives for an administrator set out in Schedule B1 of the Insolvency Act 1986.

    Full Answer

    B.Achieving a better result for the company's creditors as a whole than would be likely if the company were wound up.✓ Correct
    Paragraph 3 of Schedule B1 to the Insolvency Act 1986 sets out a strict hierarchy of objectives for an administrator: 1) Rescue the company as a going concern. 2) If that is not reasonably practicable, achieve a better result for the company's creditors as a whole than would be likely in a winding up. 3) If that is not practicable, realise property to make a distribution to secured or preferential creditors.

    Common mistakes

    Confusing the secondary objective (better result for all creditors) with the tertiary objective (paying secured/preferential creditors).
    Question 21All questionsQuestion 23

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