10 Questions
What term is used for private limited companies when they are unable to pay their debts?
Liquidated
What options are available to a debtor before formal procedures like bankruptcy or IVA?
Informally renegotiating payment terms
Why might an individual be unable to pay their debts as a sole trader?
Unlimited liability for business debts
What process is generally used for individuals who cannot pay their debts?
Insolvency
In which situation might creditors start looking at a sole trader's personal assets to cover business debts?
When the business of the sole trader has failed
What is the consequence of limited liability for shareholders and directors of a limited company?
They are not responsible for the company’s debts.
Under what circumstances can a debtor be made bankrupt?
Having debts payable immediately and insufficient funds to pay them.
When might a bank seek personal guarantees from directors of a limited company?
When the company wants to obtain bank finance.
What is the role of the Official Receiver in bankruptcy proceedings?
To take control of all of the debtor's assets.
What is the key difference in liability between a partnership and a limited company?
Partners are jointly and severally liable for partnership debts.
Explore the differences between bankruptcy for individuals like sole traders and individual partners, and liquidation for private limited companies. Learn about the insolvency options available when a person cannot pay their debts, including Bankruptcy, Individual Voluntary Arrangement (IVA), and Debt relief.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
