Administration And Cv As - Business Law and Practice

Administration

A temporary measure to (Paragraph 3 Sch B1 IA 1986):

• 3(1)(a) rescue the company as a going concern

• 3(1)(b) achieve better result for the creditors as a whole than if company were wound up

• 3(1)(c) realise property to make a distribution to one or more secured/preferential creditors

May end in:

• Rescue as a going concern

• Sale as a going concern & liquidation

• Piecemeal sale of assets & liquidation

QFCH

Para 14(1) The floating charge must be a qualifying floating charge – 2 stage test:

• 14(3) Relates to the whole, or substantially the whole, of the company’s undertaking

• 14(2) States that para 14 applies or purports to give the debenture holder the power to appoint an administrator

Para 15(1)(a) Give at least 2 business days’ notice to any prior QFCH or written consent obtained prior to the appointment of administrator

Para 18 Notice of appointment must include statutory declaration and be filed with the court stating that:

• That they have a qualifying floating charge

• It was enforceable

• Appointment is in accordance with the schedule

Para 19 Appointment takes effect when the documents have been filed

No appointment may be made my a QFCH if:

• 17 – administrative receiver is in place

• 7 – company is in administration

• 8 – company is in liquidation

• 17 – Provisional liquidator has been appointed

Company / Directors

Appointment by Company: Ordinary resolution

Appointment by Directors: Majority resolution (show of hands)

Para 26 (1) – Notice to appoint an administrator must be given to any holder of qualifying floating charges and any person entitled to appoint an administrator or administrative receiver at least 5 business days before the appointment

(3) the notice must identify the proposed administrator

Para 27 (1)– The notice and any documents accompanying it must be filed with the court

(2) the notice must include a statutory declaration that must state that:

1. the company is or is likely to be unable to pay its debts

2. not in liquidation

3. there are no restrictions to appointment

Para 29 – appointment of an administrator can be made once the 5 business days have passed. A notice of appointment, statutory declaration and statement from the administrator are then filed with the court. Appointment takes effect and the moratorium comes into effect at this point

No appointment may be made if:

• 7 – company is in administration

• 8 – company is in liquidation

• 23(2) – company has been in administration or has entered into a CVA as a result of administration within the preceding 12 months

• Found in Schedule 1 page 937

• Run the Company in place of the directors – carry on the business, sell assets, borrow money

• Has same powers of a liquidator regarding: undervalue transactions, preferences, floating charges and transactions defrauding creditors