Insolvency law

A struggling retail chain is placed into administration. Under the Insolvency Act 1986, what is the primary hierarchical objective of an administrator?

A creditor wishes to force a company into compulsory liquidation because the company cannot pay its debts. The creditor plans to serve a statutory demand. What is the minimum debt threshold required to serve a statutory demand on a company?

Six months before 'BuildRight Ltd' goes into insolvent liquidation, the directors sell a company-owned excavator worth £50,000 to the Managing Director's spouse for £5,000. Under the Insolvency Act 1986, what power does the liquidator have regarding this sale?

In a corporate liquidation, which of the following debts is paid first out of the realized assets (after the expenses of the liquidation itself)?

What is the legal term for the event where a floating charge converts into a fixed charge, attaching to the specific assets held by the company at that moment?

**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:** Under the Insolvency Act 1986, what civil liability do the directors face for continuing to trade and incur debt when they knew insolvency was unavoidable?

**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:** How would the liquidator classify the £50,000 repayment to the Managing Director's brother?

**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?

Section A When a company enters administration, the administrator must perform their functions with a specific statutory objective in mind. What is the primary (first tier) objective of administration under Schedule B1 of the Insolvency Act 1986?

Section A A creditor is owed £5,000 by a company. The creditor serves a statutory demand for the debt at the company's registered office. How long must the creditor wait for the debt to remain unpaid before they can use this as proof of inability to pay debts to petition for compulsory liquidation?

Section A Six months before going into liquidation, a company transfers a valuable piece of machinery to one of its unsecured creditors to settle a debt, intending to put that creditor in a better position than others. What type of voidable transaction is this?

Section A In a liquidation, which of the following debts is paid first from the company's realized assets?

Section A In a compulsory liquidation, who is automatically appointed as the initial liquidator as soon as the winding-up order is made by the court?

Section B - Scenario 5 SCENARIO: 'EcoTransit Ltd' operates an electric scooter network. The company has been losing money for months. By 1st September, the directors realize there is no reasonable prospect of avoiding insolvent liquidation. However, they continue trading for another two months, ordering £50,000 of new scooters on credit. During this time, they also repay a £20,000 unsecured loan owed to the brother of one of the directors. The company finally enters insolvent liquidation on 1st November. QUESTION: By continuing to trade and incur debt after 1st September, what specific civil offense have the directors committed under the Insolvency Act 1986?

Section B - Scenario 5 SCENARIO: 'EcoTransit Ltd' operates an electric scooter network. The company has been losing money for months. By 1st September, the directors realize there is no reasonable prospect of avoiding insolvent liquidation. However, they continue trading for another two months, ordering £50,000 of new scooters on credit. During this time, they also repay a £20,000 unsecured loan owed to the brother of one of the directors. The company finally enters insolvent liquidation on 1st November. QUESTION: The liquidator wishes to challenge the £20,000 repayment to the director's brother as a voidable preference. Because the brother is a 'connected person', what legal advantage does the liquidator have in this claim?

Section A What is the primary purpose of an Administration order under the Insolvency Act 1986?

Section A During a liquidation, the liquidator discovers that the directors continued to trade and incur debts for six months after they knew, or ought to have concluded, that there was no reasonable prospect of avoiding insolvent liquidation. What action can the liquidator take against the directors?

Section A In a compulsory liquidation, who officially appoints the liquidator?

Section A Which of the following debts ranks highest in the statutory order of distribution during a liquidation?

Section B - Scenario 5 AeroLogistics Ltd is a freight service firm. Following the crystallization of the charge, BankCorp decides to appoint an Administrator to try and rescue the company. BankCorp holds a 'Qualifying Floating Charge' (QFC). How can BankCorp appoint an Administrator?

Section B - Scenario 5 AeroLogistics Ltd is a freight service firm. The administration fails, and AeroLogistics Ltd goes into liquidation. The liquidator realizes £200,000 from selling assets subject to BankCorp's floating charge. However, there are unpaid employee wages of £50,000 and unsecured trade debts of £100,000. How will the £200,000 be distributed (ignoring liquidation expenses and the prescribed part)?