Section B - Scenario 5
SCENARIO: 'EcoTransit Ltd' operates an electric scooter network. The company has been losing money for months. By 1st September, the directors realize there is no reasonable prospect of avoiding insolvent liquidation. However, they continue trading for another two months, ordering £50,000 of new scooters on credit. During this time, they also repay a £20,000 unsecured loan owed to the brother of one of the directors. The company finally enters insolvent liquidation on 1st November.
QUESTION: By continuing to trade and incur debt after 1st September, what specific civil offense have the directors committed under the Insolvency Act 1986?
ACCA · Question 60 · Management, administration and the regulation of companies
Section B - Scenario 5
SCENARIO: 'EcoTransit Ltd' operates an electric scooter network. The company has been losing money for months. By 1st September, the directors realize there is no reasonable prospect of avoiding insolvent liquidation. However, they continue trading for another two months, ordering £50,000 of new scooters on credit. During this time, they also repay a £20,000 unsecured loan owed to the brother of one of the directors. The company finally enters insolvent liquidation on 1st November.
QUESTION: As a result of their conduct, the Secretary of State applies to have the directors disqualified under the Company Directors Disqualification Act 1986 for 'unfit conduct' in relation to an insolvent company. What is the maximum period of disqualification the court can impose for this?
Answer options:
5 years
10 years
15 years
Life
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