Chapter 22 Self-test questions

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. The purpose of administration consists of three objectives. What is the first and principal objective?

To achieve a better result for the company's creditors than would be likely if the company were wound up correct incorrect

To wind up the company and distribute the company's assets to persons so entitled correct incorrect

To rescue the company as a going concern correct incorrect

To realize property in order to make a distribution to one or more secured or preferential creditors correct incorrect

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. Which one of the following is not a valid method of appointing an administrator?

Appointment by a preferential creditor correct incorrect

Appointment by the court correct incorrect

Appointment by the company correct incorrect

Appointment by a qualifying floating chargeholder correct incorrect

Appointment by the directors correct incorrect

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. What effect will the granting of an administration order have on a pending winding-up petition?

The winding-up petition will be suspended correct incorrect

The winding-up petition will be dismissed correct incorrect

The administration order has no effect upon the winding-up petition correct incorrect

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. The directors of a company automatically lose office once a company enters administration.

True correct incorrect

False correct incorrect

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. Whilst a company is in administration, a moratorium will be in effect. Which of the following will generally be prohibited during this moratorium?

A creditor will not be permitted to take steps to repossess goods in the company's possession under a hire-purchase agreement correct incorrect

The company will not be permitted to change its status (e.g. from public to private) correct incorrect

A creditor will not be permitted to take steps to enforce his security correct incorrect

A creditor will not be permitted to institute or continue any legal process against the company correct incorrect

A resolution cannot be made to wind the company up correct incorrect

An administrative receiver cannot be appointed correct incorrect

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. Can an administrator exercise his powers prior to his proposals being approved?

Yes correct incorrect

No correct incorrect

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. Regarding the termination of an administrator's appointment, which of the following statements are untrue?

An administrator's appointment will terminate if he notifies Companies House that he intends to place the company into a members' voluntary winding up correct incorrect

A creditor can apply to the court for an order terminating the administrator's appointment on the ground that the administrator has failed to fulfil the purpose of administration correct incorrect

An administrator's appointment is automatically terminated after one year correct incorrect

An administrator can apply to the court for an order terminating his appointment correct incorrect

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. Which of the following can propose a company voluntary arrangement?

An administrator correct incorrect

A liquidator correct incorrect

The directors correct incorrect

The members correct incorrect

A creditor of the company correct incorrect

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. If the members and creditors are given the opportunity to approve the CVA proposal and their decisions conflict, what happens?

The decision of the members prevails correct incorrect

The decision of the creditors prevails correct incorrect

The nominee must come up with revised proposals to be put to the members and creditors correct incorrect

The CVA proposal fails correct incorrect

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. The main difference between administration and a company voluntary arrangement is that the latter cannot provide a moratorium.

True correct incorrect

False correct incorrect