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LPC Law Notes Business Law and Practice Notes

Insolvency Crib Sheet Notes

Updated Insolvency Crib Sheet Notes

Business Law and Practice Notes

Business Law and Practice

Approximately 649 pages

A collection of the best LPC BLP notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LPC samples from outstanding students with the highest results in England and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor".

In short these are what we believe to be the strongest set of Business Law and Practice notes available in the UK this year. This collection of notes is fully updat...

The following is a more accessible plain text extract of the PDF sample above, taken from our Business Law and Practice Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:


  1. Is the balance sheet accurate

    1. Check date

      1. Does it pre-date any more recent discoveries that would inflate or deflate the balance sheet values

    2. Is there the potential of any bad debts?

      1. Is there a provision for bad or doubtful debts in the balance sheet?

  2. Is the company insolvent?

    1. 122(1)(f) IA 1986 company will be insolvent if it is unable to pay its debts

      1. Is the company balance sheet insolvent?

        1. 123(2) is the value of the company’s assets less than the amount of its liabilities, taking into account contingent & prospective liabilities?

          1. APPLY TO FACTS

      2. Has the company “reached the point of no return”?

        1. BNY Corporate Trustee Services v Eurosail UK

      3. Is the company cash-flow insolvent

        1. 123(1)(e) is the company unable to pay its debts as they fall due?

          1. APPLY TO FACTS

      4. 123(1)(a) is a creditor owed more than 750, and has he served on the company a written demand requiring the company to pay the sum due, and has the company neglected to pay the sum for 3 weeks?

      5. 123(1)(b) Has a creditor obtained judgment against the company & attempted to execute the judgment, & is the debt still unsatisfied in part or full?

  3. What can creditors do?

    1. Petition for Company’s Compulsory Liquidation

      1. Prove company is insolvent as defined by 122 IA 1986

        1. Court makes winding up order – Official Receiver appointed as liquidator

      2. 129(1) winding up of the company by the court is deemed to commence at the time of presentation of the winding up petition

      3. 103 Directors will be dismissed

      4. Costs of winding-up have to be borne out of the company’s assets reducing the amount of the funds for creditors

    2. Force the directors to commence a creditors’ voluntary liquidation

      1. 84(1)(b) special resolution of members to wind company up voluntarily


    3. Apply for an administration court order by the company

      1. Administrator has a duty to try to achieve one of 3 statutory purposes para 3(1) Sch B1

        1. (a) rescue company as a going concern

        2. (b) Achieving better results for company’s creditors as a whole than would be likely if company were wound up

        3. (c) realising property in order to make a distribution to one or more secured/ preferential creditors

    4. Is there a floating charge?

      1. Created before 15 September 2003

        1. Appoint an administrative receiver if company has defaulted on the loan

    5. If QFCH then can follow out-of-court route for pushing the company into administration

      1. Also can follow this route if have ability to appoint an admin receiver 14(2)(c)

      2. Administrator’s first priority is rescue of the company as a going concern para 3(1) Sch B1 but creditor can choose appointment of administrator

    6. If fixed charge then can appoint an LPA receiver

      1. 101 LPA 1925 implied power to appoint receiver whenever company in breach of a loan agreement

      2. Act solely for charge holder

      3. Assets may be worth considerably less than their book value and so route may result in creditor recovering less than it is owed

  4. What can members do?

    1. Special resolution for members voluntary liquidation


    2. Generally shareholders are only liable to the extent that their shares are not fully paid 74(1)

      1. Both past & present members can be liable to this extent 74(2)(d)

      2. 127(1) any transfer of shares once insolvency proceeding have begun is void

  5. What can directors do?

    1. Continue to trade on the basis that the position has not yet been reached where insolvency is inevitable

    2. Look to have the company placed in creditors’ voluntary liquidation

    3. Court route into administration

      1. Moratorium on enforcement of company’s liabilities would be imposed

    4. Instigate a CVA

      1. It might be possible to persuade the creditors not to pursue their claims now if there is a sufficiently attractive prospect of payment in the future if trading improves

        1. 899(1) CA 2006 75% in value of unsecured creditors at meeting must agree to directors’ proposals

          1. R1.19(1) IR 1986 secured creditors cannot vote

        2. APPLY TO FACTS – is company a “small company” 382 CA 1986?

          1. If not it cannot apply for a moratorium whilst CVA is put into place

    5. Prepare up to date accounts in order to give them a clear view of Company’s actual financial status, on which they can base their decision

    6. Seek & follow advice of insolvency practitioner, as by doing so they may be able to show that they are taking every step to minimise the loss to creditors, thus giving them a defence to a wrongful trading claim

  6. Directors’ liabilities?

    1. Did directors know or ought to have concluded that there was no reasonable prospect of the company avoiding insolvent liquidation?


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