LPC Law Notes Business Law and Practice Notes
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:
Insolvency
Is the balance sheet accurate
Check date
Does it pre-date any more recent discoveries that would inflate or deflate the balance sheet values
Is there the potential of any bad debts?
Is there a provision for bad or doubtful debts in the balance sheet?
Is the company insolvent?
122(1)(f) IA 1986 company will be insolvent if it is unable to pay its debts
Is the company balance sheet insolvent?
123(2) is the value of the company’s assets less than the amount of its liabilities, taking into account contingent & prospective liabilities?
APPLY TO FACTS
Has the company “reached the point of no return”?
BNY Corporate Trustee Services v Eurosail UK
Is the company cash-flow insolvent
123(1)(e) is the company unable to pay its debts as they fall due?
APPLY TO FACTS
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?
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?
What can creditors do?
Petition for Company’s Compulsory Liquidation
Prove company is insolvent as defined by 122 IA 1986
Court makes winding up order – Official Receiver appointed as liquidator
129(1) winding up of the company by the court is deemed to commence at the time of presentation of the winding up petition
103 Directors will be dismissed
Costs of winding-up have to be borne out of the company’s assets reducing the amount of the funds for creditors
Force the directors to commence a creditors’ voluntary liquidation
84(1)(b) special resolution of members to wind company up voluntarily
SEE FLOW CHART FOR DETAILED PROCEDURE
Apply for an administration court order by the company
Administrator has a duty to try to achieve one of 3 statutory purposes para 3(1) Sch B1
(a) rescue company as a going concern
(b) Achieving better results for company’s creditors as a whole than would be likely if company were wound up
(c) realising property in order to make a distribution to one or more secured/ preferential creditors
Is there a floating charge?
Created before 15 September 2003
Appoint an administrative receiver if company has defaulted on the loan
If QFCH then can follow out-of-court route for pushing the company into administration
Also can follow this route if have ability to appoint an admin receiver 14(2)(c)
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
If fixed charge then can appoint an LPA receiver
101 LPA 1925 implied power to appoint receiver whenever company in breach of a loan agreement
Act solely for charge holder
Assets may be worth considerably less than their book value and so route may result in creditor recovering less than it is owed
What can members do?
Special resolution for members voluntary liquidation
SEE FLOW CHART FOR DETAILED PROCEDURE
Generally shareholders are only liable to the extent that their shares are not fully paid 74(1)
Both past & present members can be liable to this extent 74(2)(d)
127(1) any transfer of shares once insolvency proceeding have begun is void
What can directors do?
Continue to trade on the basis that the position has not yet been reached where insolvency is inevitable
Look to have the company placed in creditors’ voluntary liquidation
Court route into administration
Moratorium on enforcement of company’s liabilities would be imposed
Instigate a CVA
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
899(1) CA 2006 75% in value of unsecured creditors at meeting must agree to directors’ proposals
R1.19(1) IR 1986 secured creditors cannot vote
APPLY TO FACTS – is company a “small company” 382 CA 1986?
If not it cannot apply for a moratorium whilst CVA is put into place
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
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
Directors’ liabilities?
Did directors know or ought to have concluded that there was no reasonable prospect of the company avoiding insolvent liquidation?
Buy the full version of these notes or essay plans and more in our Business Law and Practice Notes.
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...
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