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51 Cards in this Set
- Front
- Back
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D must disclose interest |
s177(1) |
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D doesn't need to disclose interest if: |
Other Ds ought reasonably be aware s177(b) or there is unlikely to be a conflict s177(6)(a) (still always best practice to disclose) |
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SPT section |
s190(1)(b) |
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Director connected to body corporate |
s254- 20% of shares |
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Persons connected to D |
s252 |
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Connected to D by family |
s253 |
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Non-cash asset |
s1163 |
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substantial |
s191- £100k+, 10% companies assets and over £5k |
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Preference |
s239- DESIRE |
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Two tests for insolvency |
balance sheet test cash flow test |
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balance sheet test section |
s123(2) |
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balance sheet test |
liabilities more than assets on sheet |
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cash flow test |
unable to pay debts as they fall due |
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cash flow test section |
s123(1)(e) |
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s123(1)(a) |
creditor serves demand for over £750+ and debtor has not paid within 3 weeks then company is deemed to not be able to pay debts |
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Court option for creditor |
obtain court judgment and attempt execution |
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secured creditor's options |
appoint administrator appoint LPA receiver appoint administrative receiver (if security created before 15/11/03) |
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creditors owed less than £750 |
cannot serve demand alone but can group together |
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Companies must have register of charges |
s876 |
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5 antecedent transactions |
transactions at undervalue preferences invalid floating charges extortionate credit transactions transactions to defraud creditors |
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avoidance of floating charges section |
s245 |
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effect of s245 |
floating charge automatically void if fulfilled |
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s245(4) |
if charge given to unconnected person, co must have been insolvent at the time or become insolvent as a result |
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time administrator can look back for floating charge |
2 years connected person 1 year any other |
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transactions at an undervalue section
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s238(4) |
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transaction at an undervalue definition |
sold for less than market value or gifted |
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administrator can look back ... for transactions at an undervalue |
2 years connected 6 months any other |
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defence to transactions at an undervalue section |
s238(5) |
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preference section |
s239 |
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preference definition |
putting creditor in better position through insolvency than they would have done before |
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desire section |
239(5) |
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desire case |
M C Bacon |
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time administrator can look back for preference |
2 years if connected 6 months if not |
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preference- connected persons (presumption) |
if connected, rebuttable presumption that you preferred them |
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extortionate credit transactions |
must be grossly exorbitant s244(3) |
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extortionate credit transactions administrator can look back |
3 years |
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2 transactions defrauding creditors |
at an undervalue puts assets beyond reach of someone in relation to any claim he may make |
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any victim of transaction to defraud creditor may... |
apply to court s423 |
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avoidance of floating charge effect |
no effect on the debt owed, just that it is now unsecured as floating charge is void |
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pecking order |
1- expenses of winding up 2- preferential debts (rank/abate equally) 3- monies secured by gloating charges by order of priority (subj. to ring fencing) 4- unsecured creditors (rank/abate equally) 5- shareholders |
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registering a charge time frame and consequence |
21 days. void if not registered. |
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structure for exam- antecedent transactions |
1- challenge required? 2- definition satisfied? 3- effect of being connected person 4- relevant time 5- what else needs to be shown 6- what is the likely result |
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CVA- creditors meeting requirements |
75% of all secured creditors must be available |
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scheme of arrangement |
with individual creditors. difficult to obtain when others get wind of financial difficulties |
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effect insolvency has on DD s172 |
duty to promote success for shareholders also extends for creditors |
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what to advise as a result of change in s172 due to insolvency |
take minutes of all meetings for evidence of following duty cut down their salaries! call in debt |
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wrongful trading definition |
where d knew or ought to have known co could not reasonably avoid insolvency and carried on trading |
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wrongful trading section** |
s214** |
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defence to wrongful trading |
every reasonable step taken to avoid |
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misfeasance section |
s212 |
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misfeasance consequence section |
212 |
