Dena Governor was directed to prepare a report to present to Parliament. To this end, He has asked that you write a report to form the basis for his proposed action based on the factual background attached. You are to rely on the United Kingdom Legal Framework on Insolvency Law.
In order to do so, he asks that you provide him with the following guidance on the three main Sections below which should be in subheadings while preparing your report. Section one focus only on Administration, Section two focuses only on Liquidation and Section three focuses only on Unlawful Transactions.
1. The Governor has heard that the United Kingdom offers an excellent approach to rescuing companies by virtue of administration and requests that you advise him on how the key elements of administration map on to the aim, policies, objectives and visions of insolvency law. As these provisions will have to be tested in a court of law, He is happy for you to discuss United Kingdom jurisprudence to assist in your explanation of the above.
2. The Governor has been informed by his counsel that it is likely that if the company is not successfully rescued by virtue of administration, that he will have to place an alternate procedure in place. Having spoken to the company and its creditors, he understands that it does not intend to wind itself up. Thus, it appears that the court will have to take action in winding up the company. He has also heard that the United Kingdom provides a robust method of division as assets by virtue of a procedure, called liquidation. He has also requested that you advise him on how the key elements of liquidation map on to the aim, policies, objectives and visions of insolvency law. Case law from the United Kingdom may also be useful in assisting her in understanding the relevant interpretation in a court of law.
3. Due to a range of actions of parties stated below, He has been informed by one of the Government’s junior advisers that he should consider whether the pot should be larger due to unjustified transactions in the run-up to insolvency. Based on the facts below, he has been given a list of transactions that should be further explored. he seeks your advice using English law to determine the validity of these claims. The company was insolvent when all of these transactions were made. All of these transactions would have occurred within 12 months of the company’s insolvency proceedings. he is not sure whether any assets will be produced from this investigation but is seeking to determine the validity of these claims. he has also provided you with the relevant statutory provisions which will assist the resolution of these issues:
– Money International’s extortionate interest rate (Insolvency Act 1986, section 244) and late floating charge (Insolvency Act 1986, section 245) to secure AMR$20,000
– Early payment of golden parachutes to directors (Insolvency Act 1986, section 239) and directors’ duties on the basis of a change in the terms of the golden handshake (Companies Act 2006, sections 170 – 177)
– Maka’s purchase of the land as a transaction at an undervalue (Insolvency Act 1986, section 238)
– The transfer of all the stock in the warehouse to the landlord as a preference (Insolvency Act 1986, section 239)
He also wishes to know whether there are any justified reasons why a liquidator would not proceed with a claim, even if it were found to have merit. He requests that these considerations also be balanced in light of the aim, policies, objectives and visions of insolvency law.
Note; Focus on applying the law to the factual situation from start to finish and do not be too descriptive. This is for UK law only.
OSCOLA Referencing (footnote & Bibliography)