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16 Cards in this Set
- Front
- Back
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Members’ voluntary liquidation
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e.g. purpose of business no longer exists or will not be able to meet future Ls.
MVL – stat dec of solvency by majority of d’s in 5 weeks before res to WU passed - starts w/ s/h sp res, copy of which delivered to The Gazette w/in 14 days & to Registrar w/in 15 days w/ stat dec. - liq appointed & notified to The Gazette & to Reg w/in 14 days & advertised in local newspaper - if liq forms view FP is not suff to pay all Ls in acc w/ stat dec, process altered & meeting of Crs convened & held w/in 28 days. |
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Creditors’ voluntary liquidation
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CVL – by defulat if can’t make stat dec – contact every Cr & cease trading to avoid increasing L’s, e/e’s dismissed.
- starts w/ s/h sp res. - board resolves to convene Cr’s meeting & appoints a chairman for it – must be convened w/in 14 days of s/h res passed & at least 7 days’ notice must be sent to Crs. Also notify The Gazette & advertised in 2 local newspapers (for other potential Crs). - statement of affairs prep by d’s & reviewed at Cr meeting to assess extent of ability to meet debts - liq appointed & notified to The Gazette & Reg w/in 14 days & advertised in local newspaper - liq sends stmnt of affairs to Reg w/ relevant forms w/in 5 business days of Crs meeting. - pre-5/4/10, liq also sends stmnt of receipts/payments for 1st 12 mnths + every 6mnths until WU complete, & post-6/4/10, sends liquidator’s report for first 12mnths of liq and every 12mnths after until WU complete. - D&O’s must cooperate fully and ensure records complete and up to date. - once As realised & distributed, co is WU and liq prepares a final account for presentation to meetings of members & creditors – at least 1 mnths notice, inc publication in The Gazette. - w/in 1 week of meting, liq sends final progress report to Registrar attached to a return of final meeting form. Co is dissolved 3mnths after (unless court makes an order deferring dissolution). |
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Compulsory liquidation
(official receiver) |
Court order issued to WU co – co compelled to WU affairs. Usually initiated by Crs who consider co unable to pay its debts. Can be by co itself, members, or Sec of State on grounds of public interest.
Unable to pay its debts where: £750 owing & unpaid; co failed to settle debt in full or to acceptance of 1+ Crs; formal stat demand served & not settled. - petition to WU publicised before court hearing in The Gazette - if petition approved, court order granted – must be made public immediately by co delivering copy of order to Reg - official receiver app’d as liq – reviews A&Ls & investigate circs led to order - d’s req’d to produce stmnt of affairs to assist – reviewed by OR imp to reveal if d’s breached duties. D’s powers transferred to OR & e/e’s dismissed. - liq rules re priority kick in, any frustrating action by Crs void, no transfers can be registered w/out court’s permission - after initial investigation, OR considers whether meetings of Crs & contributories necy – if so, liq app’d & takes over from OR to progress realisation & distribution of As – notified to Reg w/out delay. If no meetings, inform Crs, contributories + court. - WU in acc w/ IA86 & once completed final report sent to Reg who will dissolve co 3+ mnths - if FP so bad that can’t meet costs of OR/liq/WU costs, OR may use fast-track procedure to apply to Reg for co to be dissolved (3 mnths following receipt of notification). |
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Administration orders
(Administrator) Under EA 2002 |
A court order giving power to manage the business to an administrator = ‘protective breathing space’ (cannot have admin receiver app’d or be WU). Sought by co itself, d’s or Crs & sought if co is, or is likely to become, unable to pay its debts.
Out of court by co’s d’s or by a qualifying floating charge holder can also appoint administrator (doc for out of court app must be filed w/ court so aware & can provide administrator). Purpose is usually: - to keep bus operational as a GC or if not poss, - to restructure/operate bus so that it may be sole (whole/part) to raise greater sum/better result for Crs than from WU; or if neither poss, - to realise property to make distributions to secured or preferential Crs (where not unnecy harm to other Cr interests). - A’r prepares proposals for mnging affairs of bus to present to co’s Crs for approval - asap and before end of 8 weeks after co enters admin; A’r makes stmnt setting out proposals to achive purpose or explain why cannot be achieved (could be vol arrangement, a compromise, or arrangement w/ Crs or members) - A’r lodges copy of court order & details of proposals w/ Reg and advertisement re court order made in The Gazette and local newspaper. Also lodges a/cs showing receipts/payments at least every 6mnths. - A’r stat duty to act w/ speed and efficiency & in interests of co as a whole. - d’s continue to hold office but cannot exercise their powers w/out A’rs consent. Duty to co-operate. - A’r stat powers to remove/appoint d’s & to convene meetings of Crs or members – poss involve assistance of cosec (list of members) - admin usually ends 1 yr following commencement unless purpose achieved earlier. Can be extended by further 6mnths by approval of Crs or by future court extension order. - must continue filing returns (but unlikely breaches will be enforced during period of admin). |
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Corporate voluntary arrangements
Unanimous creditor arrangement; or Formal voluntary arrangement (s. 899) – (nominee & supervisor) |
Unanimous creditor arrangement – a/g w/ all creditors for a settlement arrangement – informal & each Cr agrees.
Formal voluntary arrangement – no unanimous decision then a/g approved by court for co to reach a composition in satisfaction of debt w/ its Crs. Proposed by A’rs, liq’rs, members, or d’s, (not Crs). Procedure: - nominee app’d to oversee proposal - 2 meeting convened (Crs & members) – only certain amendments to proposed plan of VA permitted & views of Crs prevail over members. If approved, binding on every Cr entitled to receive notice of meeting. - proposal from meetings submitted to court for approval & which point nominee becomes supervisor of VA. - supervisor prep report of meetings for submission to Reg & while VA in force, must submit a/cs showing receipts/payments to Reg & all other interested parties at least annually. - app comes to end when arrangement satisfied or revoked – Reg must be informed w/in 28 days. Poss for nominee to enforce a statuory moratorium under IA 2000 – no Cr can proceed w/ action against co’s As over stipulated period (28 days, extend by further 2 mnths). Available for small co’s defined under CA06 & provides opp to review whether VA can be achieved. |
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Corporate voluntary arrangements
Unanimous creditor arrangement; or Formal voluntary arrangement (s. 899) – (nominee & supervisor) |
Unanimous creditor arrangement – a/g w/ all creditors for a settlement arrangement – informal & each Cr agrees.
Formal voluntary arrangement – no unanimous decision then a/g approved by court for co to reach a composition in satisfaction of debt w/ its Crs. Proposed by A’rs, liq’rs, members, or d’s, (not Crs). Procedure: - nominee app’d to oversee proposal - 2 meeting convened (Crs & members) – only certain amendments to proposed plan of VA permitted & views of Crs prevail over members. If approved, binding on every Cr entitled to receive notice of meeting. - proposal from meetings submitted to court for approval & which point nominee becomes supervisor of VA. - supervisor prep report of meetings for submission to Reg & while VA in force, must submit a/cs showing receipts/payments to Reg & all other interested parties at least annually. - app comes to end when arrangement satisfied or revoked – Reg must be informed w/in 28 days. Poss for nominee to enforce a statuory moratorium under IA 2000 – no Cr can proceed w/ action against co’s As over stipulated period (28 days, extend by further 2 mnths). Available for small co’s defined under CA06 & provides opp to review whether VA can be achieved. |
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Receivers
(& administrative receivers) |
App’d to mange whole/part of co’s property & triggered by default (e.g. fail to pay debt due). Terms w/in a debenture or other instrument creating secured charge over co’s property.
Two types – administrative receiver – app’d under a debenture secured by floating charge over all/substantially all of co’s A’s, OR – receiver – other than an admin receiver – app’d under an instrument which is secured by a charge on co’s assets. - app’d AR/R must inform Reg w/in 7 days of app & AR must also advertise in the Gazette + national or local paper. - w/in 3 mnths, must prep report to co’s crs & floating charge holders to explain why app’d & details of steps he’ll take re debt. - decides whether stmnt of affairs of co req’d (list of co’s A&Ls & Crs) – request D&Os to prep it. If prepared, summary of stmnt must be sent to Reg. - disposes of As as necy to satisfy secured debt - during receivership, sends a/cs to Reg showing payments/receipts for 1st yr, then subsequent annual intervals for ARs or 6mnthly for receivers other than AR. - ends when secured debt satisfied or waived by Cr, or other arrangement agreed e.g. admin order – receiver must notify Reg end of receivership. EA 202 – reform corporate insolvency, emphasis on rescuing not WU. Enforcement of any floating charges created after 15/9/03 (ltd exceptions) requires court approval by way of an administrative order. If created prior to this, can be enforced via administrative receivership. |
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Striking off
ss. 1000-1034 |
If ceased trading + no longer required – not alternative to insolvency proceedings. Essentail to keep detailed records/checklists/timetable to ensure meet qualifying req’s:-
- not changed co name in last 3 mnths - not undertaken trading activities or disposed of As in ord course of bus in last 3 mnths - only permitted activities in last 3 mnths those to help prep for striking off app (e.g. disposal of As as part of bus closure) - not subj of insolvency proceedings or applied for scheme of arrangement under CA06. Decision by board resolution – unanimous advisable if subsequent objections. Ensure (offence not to – fine/disqual): - qualifying conditions met; - plan of action prep to dispose of As (remaining As on dissolution go bona vacantia to the Crown); - 3rd parties informed in timely manner (so opp to object – provide copy of DS01 w/in 7 days of filing). Incs Crs, d’s who didn’t sign DS01, mngrs/trustees of pension scheme, VAT office, s/hs, e/es, any person who becomes Cr/D/etc. – Notify by hand or recorded delivery & ensure current addresses – bus and RO. File DS01 w/ fee and signed (1 d/2 ds/majority). Reg place notice of intention to apply for striking off on public records of co & notice in The Gazette, inviting any objections. If none in 3 months, dissolves co by publishing further notice in the Gazette. |
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Objections to application to strike off
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Grounds:
- co doesn’t meet criteria (qualifying reqs) - fraud being attempted - interest party not informed - legal proceedings being taken against co D’s must withdraw app if become aware qual criteria no longer apply. Or any 1 d may withdraw app by signing DS02. Inform all those previously notified. |
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Striking off defunct companies – Registrar of Companies
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Must ensure stat returns filed on time & postal address maintained for receipt of doc at RO. Failure to do so may lead Reg to conclude bus is defunct.
Writes 2 formal ltrs & send notice to co’s RO to inquire whether still in operation. Must respond quickly + file o/d returns. If no response, notice will appear in The Gazette inviting objections + notice of intention to apply for striking off on public records of co. If no objections + remain satisfied co defunct, will strike off in 3 mnths by publishing further notice in The Gazette. As become bona vacantial + held by the Crown. |
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Restoration
Administrative (s. 1025) or by way of court order |
For when co shouldn’t have been struck off or if interested party discovers unfinished bus – ltd circs & by court order - reverses decision.
Administrative – no court order. Must have been struck off under ss. 1000-1 & dissolved for no more than 6 years at date app for restoration rec’d. Former d’s or members can apply provided: - co was in operation at time of strike off - Crown has consented to it if any property became bona vacantia - applicant delivers necy docs to Reg & brings records up to date (ARs, ARAs + penalties) Must also send stmnt of compliance re the above. If not allowed by Reg can apply to court. By court order – co itself, mem’s, Cr’s, any interested party who should have rec’d DS01 (like objecting), any interested party after WU under insolvency proceedings, Sec of State (public interest). Must be w/in 20 yrs (but poss longer – damages re personal injuries or fatal accidents) or 2yrs if WU following insolvency proceedings. If successful, notification will appear in The Gazette. |
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Directors of insolvent companies – disqualification
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Duties 171-177. Grounds for diqual inc wrongful or fraudulent trading under IA86. Not auto disqual if co insolvent. Liq/AR/OR obliged to sent Sec or State a report on conduct of any d who held office up to 3 yrs prior to insolvency. It is Sec of State’s decision to seek disqual.
CDDA, 1986, Sch.1 – non-exhaustive list of ground for seeking diqual order: - persistent breaches of co legislation - failure to pay taxes in due time - fraud - fraudulent or wrongful trading, as defined under IA86 - failure to comply w/ any other IA86 provision (convene Crs meetings in CVL, stmnt of affairs not produced) - inappropriate conduct (trans at undervalue, giving undue pref treatment to 1+ Crs prior to insolvency) - extent of d’s resp for causes of co becoming insolvent. Prosecution heard in court. IF disqual, court informs Reg so added to register (public). T/f imp for cosec to ensure suff freq GMs, d’s consider the trading & financial position of co, prepare schedule of stat returns (esp a/cs) to comply w/ deadlines, & GC principle reviewed. |
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Effect of disqualification
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If disqualified or undischarged bankrupt, cannot be d or concerned in promotion, formation or mngt of co unless permission granted by court.
CDDA s. 15 – he will be personally & jointly + severally liable w/ co for all relevant debts during time acted as a d. IA86 s. 216 – prohibits d of insolvent co from being d or involved in p/f/mngt of another co w/ same/substantially similar name w/in 5 yrs of insolvency – prevent phoenix co’s. |
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The Insolvency Service
(IS) ‘Official receivers’ w/in IS |
- An executive agency w/in BIS – administers + investigates affairs of ind bankrupts & co’s in liquidation, and the suspected misconduct of d’s of insolvent co’s.
- Auth to deal w/ disqual of d’s. - Provides help to d’s re liq and related matters - Is a hotline for anyone to report defiant d’s & undischarged bankrupts who disregard disqual orders against them. - Empowered to conduct the authorisation and regulation of insolvency practitioners. |
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Cosec issues re disqual of directors and insolvency
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Use checklists covering appropriate q’s inc insolvency of co’s & personal bankruptcy. CH contains index of disqual d’s and IS has online database.
Under LRs must notify certain infor to a RIS when new d app’d e.g. if d served in exec function w/in 12 mnths of any co going into receivership, compulsory liq, CVL, administration, CVA or any other composition or arrangement w/ its Crs. Must also declare if ever been disqual by court even if no longer applies. Don’t necy bar ind becoming d but must report to UKLA. D’s must consult an appropriately qualified insolvency practitioner at speed if insolvency poss. This & their general conduct may have bearing on whether disqual. Cosec should advise re IS. If subj to compulsory liq, official receiver or liq will investigate conduct of bus prior to court order and imp that all major transactions have been fully and accurately recorded in BMs (w/ supporting papers) and can stand test of scrutiny. |
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Statutory documentation and registers
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All documentation (letter heading, receipts etc) must be amended to indicate whether co is in administration, liquidation or administrative receivership and name of administrator or liquidator must appear on the documentation.
D’s req’d by law to cooperate with official receiver or other IP and cosec must cooperate esp re handing over complete and up to date statutory record (esp register of members and register of charges). Every charge must be filed w/ R of Cos w/in 21 days of creation. When satisfied or waived a Memorandum of Satisfaction or Release must be delivered to Reg. NB – good practice to search The Gazette as to whether there are any insolvency proceedings or other proceedings brought against a co before entering into a tarns w/ it. CH register of disqual d’s online and for each co, details of app of administrators or liquidators. |
