ExpertEasy2 marksMultiple Choice
ACCA · Question 23 · Corporate and Business Law
What is the primary objective of an administration order in insolvency law?
What is the primary objective of an administration order in insolvency law?
Answer options:
A.
To immediately liquidate the company's assets and pay creditors.
B.
To rescue the company as a going concern.
C.
To investigate and prosecute directors for fraudulent trading.
D.
To ensure unsecured creditors are paid in full before secured creditors.
How to approach this question
Identify the statutory hierarchy of objectives for an administrator.
Full Answer
B.To rescue the company as a going concern.✓ Correct
Under the Insolvency Act 1986, the primary objective of administration is to rescue the company as a going concern. If that is not reasonably practicable, the secondary objective is to achieve a better result for creditors than would be likely if the company were wound up.
Common mistakes
Confusing administration (a rescue mechanism) with liquidation (a terminal process).
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