Chapter 24 Multiple Choice Questions

. An administrator is appointed to realise a hierarchy of objectives. What is an administrator's first objective?

To achieve a better result for the company's creditors as a whole than would be likely if the company were wound up.

To realise property in order to make a distribution to one or more secured creditors.

To rescue the company as a going concern.

To wind the company up and distribute the assets to persons entitled to them.

. An administrator can be appointed in one of several different ways. Which one of the following is not a valid method of appointment?

An administrator can be appointed by the court.

An administrator can be appointed by a floating charge holder.

An administrator can be appointed by the company's auditor.

An administrator can be appointed by the company.

An administrator can be appointed by the directors.

. During the period of administration, unless permission has been obtained from the administrator or the court, no creditor can take steps to enforce his security over the company's property.

True

False

. Regarding the proposal for a company voluntary arrangement, which one of the following statements is NOT true?

If the company is in administration, the proposal will be made by the administrator.

If the company is in liquidation, the proposal will be made by the liquidator.

If the company is neither in administration or liquidation, the proposal can be made by the directors.

If the company is neither in administration or liquidation, the proposal can be made by the members or creditors.

. A company voluntary arrangement is less useful than administration because company voluntary arrangements lack any form of moratorium. True or False?

True

False

. Regarding the appointment of a receiver, which one of the following statements is NOT true?

A receiver may be a natural person or a body corporate.

A chargeholder can appoint a receiver if the instrument that created the charge states so.

The court can appoint a receiver upon an application from a creditor.

An undischarged bankrupt cannot normally act as a receiver.

. Which one of the following does NOT have the right to petition the court for a compulsory winding-up order?

A member of the company

Any creditor of the company

The Secretary of State

An administrator

The directors of the company

An official receiver

The auditor of the company

The company itself

. A compulsory winding-up order can only be made on a number of specified grounds. The majority of such orders are made on the basis of which ground?

Where the company has resolved, by special resolution, to compulsorily wind up the company.

Where the company is an 'old public company'.

The company is unable to pay its debts.

Where the company does not commence business within a year from its incorporation.

Where the court is of the opinion that the company should be wound up on just and equitable grounds.

Where a company suspends its business for a whole year.

. Which one of the following statements describes the difference between a members' voluntary winding up and a creditors' voluntary winding up?

If a majority of the directors make a declaration of solvency, the winding up will be a members' voluntary winding up. If no such declaration is made, it will be a creditors' voluntary winding up.

A creditors' voluntary winding up is commenced by the creditors, whereas a members' voluntary winding up is commenced by the members.

A members' voluntary winding up is commenced by passing a special resolution, whereas a creditors' voluntary winding up does not require a special resolution.

. Wrongful trading will only occur where, prior to the commencement of a winding up, the director knew that there was no reasonable prospect of the company avoiding insolvent liquidation. True or False?

True

False

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