Company Law Case Study

Topics: Wembley Stadium, Insurance, Wembley Pages: 2 (300 words) Published: April 27, 2012
Resit Coursework 2008/09

Answer the following question

In January 2009, Adam began preparations to form a company to bid for a contract to provide security services at the new Wembley stadium. The company would be called ‘Fortress Ltd’. In February 2008, Adam received a loan of £10,000 from Pioneer Bank to finance the proposed company’s bid for the contract. A clause in the loan agreement stated: “By this agreement made between you ‘Fortress Ltd’ and ourselves, we ‘Pioneer Bank’ agree to lend you and you agree to borrow from us the sum of £10,000 on our terms and conditions.”

On 10 March, Adam sold a van which he owned to Fortress Ltd and insured the van in the company’s name. On 12 March, the company was incorporated. On 20 March, the insurance company paid Adam a rebate of £1500 to encourage Fortress Ltd to continue insuring with the company. Adam did not disclose the payments to the other shareholders who have now discovered it.

a) Fortress Ltd has now gone into liquidation without paying the loan from Pioneer Bank. Advise as to whether Adam is liable, as promoter, to repay the loan. (50 marks)

b) Advise the other shareholders as to whether Adam breached his duties as a promoter for not disclosing the payment from the insurance company. (50 marks)

Your answer should be approximately 1500 words long and should address all the issues raised in the question. You must refer to relevant legislation, legal principles and case law. Marks will be deducted if your answer is more than 150 words outside the word limit. You are expected to word count your work and include a note of this at the end. You should read the grading criteria in your module booklet before attempting the question. -------------------------------------------------




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