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Fraudulent Trading
In company law, fraudulent trading is doing business with intent to defraud creditors. Law 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 (if any) to the company's assets as the court thinks proper. Conceptually, fraudulent trading is similar to a fraudulent conveyance,In the United Kingdom, see section 423 of the Insolvency Act 1986 but the key distinction is that an application to have a transaction set aside as a fraudulent conveyance usually requires to the third party beneficiary to disgorge the benefit of the conveyance to undo the loss to the company's assets, whereas a court order in relation to fraudulent trading it is the responsible parties (usually the directors) who must make up the loss and the third party beneficiaries will usually r ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Creditor
A creditor or lender is a party (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property or service to the second party under the assumption (usually enforced by contract) that the second party will return an equivalent property and service. The second party is frequently called a debtor or borrower. The first party is called the creditor, which is the lender of property, service, or money. Creditors can be broadly divided into two categories: secured and unsecured. *A secured creditor has a security or charge over some or all of the debtor's assets, to provide reassurance (thus to ''secure'' him) of ultimate repayment of the debt owed to him. This could be by way of, for example, a mortgage, where the property represents the security. *An unsecured creditor does not have a charge over the debtor's assets. The term credito ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Unsecured Creditor
An unsecured creditor is a creditor other than a preferential creditor that does not have the benefit of any security interests in the assets of the debtor. In the event of the bankruptcy of the debtor, the unsecured creditors usually obtain a ''pari passu'' distribution out of the assets of the insolvent company on a liquidation in accordance with the size of their debt after the secured creditors have enforced their security and the preferential creditors have exhausted their claims. Although in a liquidation the unsecured creditors will usually realize the smallest proportion of their claims, in some legal systems, unsecured creditors who are also indebted to the insolvent debtor can (and in some jurisdictions, must) set off the debts, putting the unsecured creditor with a matured liability to the debtor in a pre-preferential position. See also * Preferential creditor * Secured creditor A secured creditor is a creditor with the benefit of a security interest over some or a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Insolvency
In accounting, insolvency is the state of being unable to pay the debts, by a person or company ( debtor), at maturity; those in a state of insolvency are said to be ''insolvent''. There are two forms: cash-flow insolvency and balance-sheet insolvency. Cash-flow insolvency is when a person or company has enough assets to pay what is owed, but does not have the appropriate form of payment. For example, a person may own a large house and a valuable car, but not have enough liquid assets to pay a debt when it falls due. Cash-flow insolvency can usually be resolved by negotiation. For example, the bill collector may wait until the car is sold and the debtor agrees to pay a penalty. Balance-sheet insolvency is when a person or company does not have enough assets to pay all of their debts. The person or company might enter bankruptcy, but not necessarily. Once a loss is accepted by all parties, negotiation is often able to resolve the situation without bankruptcy. A compa ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
UK Company Law
The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary legal vehicle to organise and run business. Tracing their modern history to the late Industrial Revolution, public companies now employ more people and generate more of wealth in the United Kingdom economy than any other form of organisation. The United Kingdom was the first country to draft modern corporation statutes, where through a simple registration procedure any investors could incorporate, limit liability to their commercial creditors in the event of business insolvency, and where management was delegated to a centralised board of directors. An influential model within Europe, the Commonwealth and as an international standard setter, UK law has always given people broad freedom to design the internal company rules, so long as the mandat ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Re Sarflax Ltd
''Re Sarflax Ltd'' 979Ch 592; 9791 All E.R. 529 is a UK insolvency law case concerning voidable preferences and fraudulent trading, now in the Insolvency Act 1986. It concerns the definition of "intention to defraud", which is found in a number of legal provisions. Facts Sarflax Ltd was in liquidation. It incurred another debt after a judgment that it had delivered unsatisfactory goods. The liquidator moved for a declaration that the delivery of these unsatisfactory goods was evidence of fraudulent trading. It also argued Sarflax had preferred other creditors over the {{not a typo, deliveree, knowing it was unable to pay its debts in full. Judgment Oliver J held that "intention to defraud" in the voidable preference section (now Insolvency Act 1986, section 239) did not cover a case where a debtor merely knew or had grounds to think he had no sufficient funds to pay creditors in full. See also *'' R v. Grantham'' 984QB 675 *'' Re Augustus Barnett & Son Ltd'' 986 Year 986 ( ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Re Augustus Barnett & Son Ltd
''Re Augustus Barnett & Son Ltd'' 986BCLC 170 is a UK insolvency law case on the standard of fault required to show that directors have been guilty of fraudulent trading. Facts Augustus Barnett & Sons Ltd (Barnett) was a subsidiary of Rumasa SA and the main retail UK retail store for wine and sherry export. Barnett had a deficiency of assets, and its auditors would not certify accounts on a going concern basis, unless Rumasa confirmed it would keep supporting the company. Rumasa did, saying with a ' letter of comfort' on June 1, 1982 that it would provide additional working capital. It had given £4m in subsidies by 1981. Rumasa was nationalised by the Spanish government on February 23, 1983. Barnett's asset deficiency was now £4.5m. Auditors and lawyers advised that the directors of Barnett were at risk of personal liability for fraudulent trading (now s.213 Insolvency Act 1986; then s.332 Companies Act 1948Also intermittently, s.630 of the Companies Act 1985.) unless more mon ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
R V Grantham
''R v Grantham'' 984QB 675 is a UK insolvency law case which decides that an intent to defraud, now under the Insolvency Act 1986 section 213, needs to be established for a conviction for fraudulent trading, and knowing that there was no prospect of being able to pay debt when they fell due, even if there might be a distant prospect in the future, constituted an intent to defraud. Facts Mr Grantham was tried for fraudulent trading, contrary to the Companies Act 1948 section 332(3) (now Insolvency Act 1986 section 213). The jury were directed that they could find dishonesty and intent to defraud if they thought Mr Grantham obtained credit when he knew there was no good reason for thinking that his company would be able to repay the debt when it became due. Mr Grantham was convicted. He appealed that the jury was given the wrong direction. Judgment Lord Lane CJ, Boreham J and Stuart-Smith J dismissed Mr Grantham's appeal. They held there was no error in the direction. Applying ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Insider Trading
Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider information is illegal. This is because it is seen as unfair to other investors who do not have access to the information, as the investor with insider information could potentially make larger profits than a typical investor could make. The rules governing insider trading are complex and vary significantly from country to country. The extent of enforcement also varies from one country to another. The definition of insider in one jurisdiction can be broad, and may cover not only insiders themselves but also any persons related to them, such as brokers, associates, and even family members. A person who becomes aware of non-public information and trades on that basis may be guilty of a crime. Trading by specific insiders, such as employees, is commo ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Floating Charge
A floating charge is a security interest over a fund of changing assets of a company or other legal person. Unlike a fixed charge, which is created over ascertained and definite property, a floating charge is created over property of an ambulatory and shifting nature, such as receivables and stock. The floating charge 'floats' or 'hovers' until the point at which it is converted ("crystallised") into a ''fixed charge'', attached to specific assets of the business. This crystallisation can be triggered by a number of events. In most common law jurisdictions it is an implied term in the security documents creating floating charges that a cessation of the company's right to deal with the assets (including by reason of insolvency proceedings) in the ordinary course of business leads to automatic crystallisation. Additionally, security documents will usually include express terms that a default by the person granting the security will trigger crystallisation. In most countries fl ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Liquidation
Liquidation is the process in accounting by which a company is brought to an end in Canada, United Kingdom, United States, Ireland, Australia, New Zealand, Italy, and many other countries. The assets and property of the company are redistributed. Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation. The process of liquidation also arises when customs, an authority or agency in a country responsible for collecting and safeguarding customs duties, determines the final computation or ascertainment of the duties or drawback accruing on an entry. Liquidation may either be compulsory (sometimes referred to as a ''creditors' liquidation'' or ''receivership'' following bankruptcy, which may result in the court creating a "liquidation trust") or voluntary (sometimes referred to as a ''shareholders' liquidation'', although some voluntary liquidations are controlled by the creditors). The term ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Security Interest
In finance, a security interest is a legal right granted by a debtor to a creditor over the debtor's property (usually referred to as the ''collateral'') which enables the creditor to have recourse to the property if the debtor defaults in making payment or otherwise performing the secured obligations. One of the most common examples of a security interest is a mortgage: a person borrows money from the bank to buy a house, and they grant a mortgage over the house so that if they default in repaying the loan, the bank can sell the house and apply the proceeds to the outstanding loan. Although most security interests are created by agreement between the parties, it is also possible for a security interest to arise by operation of law. For example, in many jurisdictions a mechanic who repairs a car benefits from a lien over the car for the cost of repairs. This lien arises by operation of law in the absence of any agreement between the parties. Most security interests are grant ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
