Company Law Liquidation

Brown brothers Brakes LTD has invested large amount in producing a range of products for supermarkets. The comp any is veneer financial difficulties due to unsuccessful. In that situation director fear the come with may now be in declaration. The accountant now wants to down the stairsstand the issues surrounding insolvency.According to Brown Bothers current situation it has been recommended to their director to go with the following issues.InsolvencyA companion which is insolvent may be put into liquidation sometimes referred to as winding-up. Insolvency means the inability to pay ones debts as they fall due. Insolvency refers to the inability of a company to pay morose its debts.AdministrationThis occurs when a company which is in financial difficulty is put into the hands of an administrator. An administrator is name as an officer of the philander and an agent of the company by qualified Floating Charge holder and must act in the interests of all the creditors and attempt to rescue the company as a waiver concern or more often if they contribute get a better price for assets than adjacent liquidation would give. In general it is a process that happens when company face financial difficulties.He lead be working for companies interest, in effectuate to pay out companies all creditors they can take any decision such as if it is profitable to keep running the company or sell in profitable price and pay to its creditors. An administrator may be name by court pitch issued from court or qualified vote down holder and directors of the company. As soon as an administrator has appointed any pending winding-up asks will be suspended. Enterprise act 2002 came into force 15th September 2003 region 72/A explain prohibition of appointment of administrative pass catcher.The law emphasise that qualified planless transmit holder appoints administrator rather than receiver. Once an administrator has been appointed must send a notice of his or her appointme nt to the company and each of its creditors and publish notice of his or her appointment in the Gazette( The Gazette is the official newspaper of record which contains various statutory notices and advertisements, it is published twice weekly and can be obtained from the Edinburg company house) and in a newspaper in the ara where the company has its principal mystify of business.Administration receivership Floating charges registered before 15th September 2003 are governed by Insolvency Act 1986 section 50-70 and Insolvency Scotland rules 1986. Receivers are appointed under the terms of the adrift(p) charge. Their task is to ingather assets caught by the floating charge and repay the charge holder.A receiver may be appointed for the various following reasons* Any event which charge entitles holder to appoint a receiver. * 21 age after demanding payment . * Interest in arrears for 2 months not paid. * Order/resolution to wind up company . * Appointment of a receiver under anothe r floating charge .Duties of the receiver Ascertains assets caught by floating charge and realises them. Receiver pays the preferential debts IA 1986, he also pays the amount due to the charge holder and any balance is returned to company. Within 7 days of the appointment, the person who appoints the receiver must deliver notice to the Registrar of Companies for Scotland and AIB (Accountant in Bankruptcy). When the receiver ceases to act, the holder of the floating charge must deliver notice to the Registrar of Companies for Scotland and AIB within 14 days. Within 3 months of his appointment, the receiver must deliver a report to AIB with copies to the creditors of the company and the holders of a floating charge as sound as the any trustees for secured creditors of the company.Liquidation Liquidation is a process when company cant pay debts and liabilities, then A receiving system is appointed either by creditor or the members to wind up the company in browse to sell companies a ssets and pay the creditors. There are two types of liquidation, one is the voluntary liquidation and the other is lordly liquidation.Voluntary liquidation Voluntary liquidation occurs when the members of the company resolve to voluntarily wind-up the affairs of the company and dissolve. If the company is solvent, and the members have made a statutory declaration of solvency, the liquidation will proceed as a members voluntary winding-up. This takes place at a General Meeting. Companies Registrar and Gazette must be cognizant of it.Member Voluntary liquidation A member voluntary liquidation means that the company is solvent and can pay in full a creditors. Which case preferential creditors are paid first, in full if possible then ordinary creditors will be paid if sufficient funds are available.Creditor Voluntary liquidationCreditors voluntary liquidation is most common modes to closing down insolent company. This method is applied when share holders want to wind up a company. An y actions have planned at creditors meeting. As a normal process liquidator is appointed to wind up company and dismissal assets in order to pay creditors balance. At the end company directors lose their power. imperious LiquidationCompulsory liquidation of a company is when the company is ordered by a court to be appall up. The Court of Session, or Sheriff Court with the appropriate jurisdiction, may order the winding-up of a company. This may be, for example, on the petition of a creditor or creditors on the grounds that the company cannot pay its debts. It has to be advertised in Gazette. A provisional liquidator may be appointed after petition is presented. After court order interim liquidator is appointed. An official liquidator has appointed after meeting of all creditors and contributors. Then in essence same as for voluntary.Fraudulent Wrongful Trading Fraudulent trading is where a company carries on a business with the intention of defrauding creditors or for any fraudule nt purposes. Where during the course of a winding-up it appears to the liquidator that fraudulent trading has occurred, the liquidator may apply to the court for an order any persons who were knowingly parties to the carrying on of such business are to be made liable to make such contributions to the companys assets as the court thinks proper. If there is suspect of fraudulent trading following people should informed * Alert the liquidator if applicable. denotationhttp//www.companieshouse.gov.uk/about/gbhtml/gpo8s.shtmlch8