week_11_Insolvency_adn_external_administration_

week_11_Insolvency_adn_external_administration_ - Company...

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Company Law Lecture Version Week 11 2010
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Insolvency & External Administration
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What happens when a company becomes insolvent?
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Insolvency Means… A company is unable to pay its debt as and when they become due and payable (s.95A)
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When a company becomes insolvent, it should go into external administration
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External Administration 3 types: 1. Receivership 2. Voluntary Administration 3. Winding Up
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1. Receivership One way for a secured creditor to try to get money back Receiver – appointed to take control of some / all of company’s assets
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2. Voluntary Administration Involves putting a company into temporary “safety zone” from its creditors (while a decision is made about its future)
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3. Winding Up / Liquidation Involves an insolvency practitioner (“liquidator”) selling off a co’s assets & distributing proceeds among co’s creditors Result – company was wound up (i.e., its existence coming to an end)
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1. Receivership
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Who is a receiver? A person who is appointed to take control of some or all of a co’s assets May be appointed by a court (Supreme Court or Federal Court) or a secured creditor A receiver – is an agent of the company
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