Limited Liability is:

All of the above except the primary liability option

A wants to enforce a fixed charge against B ltd who has now given A a floating charge 6 months before its insolvency:

s 245 does not apply to the floating charge

Separate legal personality is NOT:

A device that delineates the extent of members' liability

A security agreement does all but ONE of the following:

Vests benficial ownership of asset in creditor

Debtors remain in possession of corporate assets

What is the essential characteristic that distinguishes a fixed charge from a floating charge:

Material control with some freedom to deal

ONE of the following is INCORRECT about s 238 IA 1986:

Consideration excludes non-financial consideration

S 239 IA 1986 considers:

Commercial considerations in the transaction

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Insolvency Law - MCQ

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Questions 20

Answers

1
Limited Liability is:
A device that sets out primary liability for corporate debt
All of the above except the primary liability option
A risk minimising device
A risk redistribution device
2
A wants to enforce a fixed charge against B ltd who has now given A a floating charge 6 months before its insolvency:
s 245 does not apply to the floating charge
A is a connected person
s 239 and s 245 apply to the floating charge
s 238 and s 423 apply to the floating charge
3
Separate legal personality is NOT:
An entrepreneurship promoting device
A device that delineates the extent of members' liability
A determinant of the owner of the business
A risk minimising device
4
Which one of the following parties enjoys the HIGHEST priority in insolvency:
Subordinated creditors
Equity claimants
Floating charge holder
General unsecured creditor claims
5
A security agreement does all but ONE of the following:
Gives debtor an equitable interest in asset
Generally provides priority over unsecured creditors
Gives creditor a right of recourse to secured asset
Vests benficial ownership of asset in creditor
6
ONE of the following is INCORRECT about the policy rationale for transactional avoidance:
Fraud
Creditor rights
Unjust enrichment
Collectivity
7
In BTI v Sequana, all but ONE of the following are valid determinants of directors' 'creditor duty':
Real risk of insolvency test
Cash-flow test
Balance sheet test
Probable risk of insolvency test
8
An administrative receiver is:
Primarily accountable to the company
An agent of the appointing creditor
An officer of the court
None of the options here
9
Which one of the following quasi-security is suitable for raising finance over book debts:
Factoring
Quistclose Trust
Retention of Title
Kayford Trust
10
One of the following is TRUE of Liquidations:
Inability to disclaim onerous contracts
Statutory trust for persons
Corporate rescue
Revival of dissolved companies
11
In a CVA:
Directors act as CVA supervisors
Directors lose their office
Debtors remain in possession of corporate assets
Secured and preferential creditors are crammed down
12
What is the essential characteristic that distinguishes a fixed charge from a floating charge:
Total Control
Contractual control stipulations
Assets that are not normally dealt with in course of business
Material control with some freedom to deal
13
Administration could be:
A pre-insolvency procedure
Initiated by a floating chargee before charge is enforceable
An out-of-court fixed chargee initiated procedure
A debt recovery tool
14
Which one of the following parties enjoys the LOWEST priority in insolvency:
Prescribed part creditor
Preferential bank depositor creditor
Floating charge holder
Preferential employee creditor
15
An inter-creditor agreement provides that A will be paid after B in insolvency. The Pari Passu Rule:
Will invalidate the effect of the agreement
Will respect this agreement
Will invalidate the agreement
Will look at the commercial rationale of this agreement.
16
One of the following provisions is NOT a "Redistributive Provision" under the Insolvency Act 1986:
s 239
s176ZA
sch B1 para 70
s 175
17
Insolvency Law's functions exclude ONE of the following:
Investigative policy
Distributive policy
Claw-back policy
Crown-protection policy
18
The Anti-Deprivation Rule:
Applies only to creditors
Defeats forfeiture clauses
Applies to non-creditors
Defeats determinable interests
19
ONE of the following is INCORRECT about s 238 IA 1986:
Transaction includes security
Burden of proving undervalue is on office-holder
Consideration excludes non-financial consideration
Gifts are caught by the provision
20
S 239 IA 1986 considers:
Effect of transaction on non-sureties/non-creditors
Commercial considerations in the transaction
Outcome of transaction on non-sureties/non-creditors
Intention to prefer

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