Corporate Insolvency

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  • Topic: Bankruptcy, Insolvency law, Debt
  • Pages : 2 (440 words )
  • Download(s) : 63
  • Published : March 20, 2013
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When company is put under VA, it will go through 2 phases. The first phase is company enters into VA, which commences with the appointment of administrator: s 435C(1). In this phase, the company is put under moratorium. Under moratorium: * Creditors should stay all legal proceedings against the company except by the administrator’s consent or court’s order : s 440D

* A company under VA cannot be wound up voluntarily except as provided by s 446A: s 440A

* Secured creditors cannot take possession of property except by the administrator’s consent or court’s order: s 440B

* Owners/lessors of property used by the company cannot take possession or recover property except by the administrator’s consent or court’s order: s 440C

* Under s440J, creditors cannot enforce a guarantee against a director, spouse or relative of a director in respect of a liability of the company without the leave of the court. (Creditor can issue a bankruptcy notice against a guarantor director: Re Behan).

However, there are some exceptions to moratorium.
Under s441A, a secured creditor with a charge over the whole, or substantially the whole, of the property of a company has the ability to enforce the charge within the ‘decision period’ (within 10 business days of the charge being given notice of the administrator’s appointment). Under s441B, if the creditor has entered into possession before the administrator was appointed, the charge may be enforced. Under s441C, a creditor holding security over perishable goods may enforce a charge in relation to those goods despite the appointment of an administrator. In the second phase, creditors held meeting to decide company’s future: s 439A. In this meeting, the creditors can make decision under s 439C to make the company entering deed of company arrangement, to wound up the company, or to terminate the administration. 2. DEED OF COMPANY ARRANGEMENT

When the...
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