Corporate Winding-Up and Insolvency Law Quiz

A person whose liabilities (what they owe) exceed their assets (what they own). This means they cannot pay back all their debts.

The process where a court formally declares that a debtor's assets are insufficient to pay their debts and places them under the control of a court-appointed official.

A person or entity that is owed money or performance by another person or entity. There are different types of creditors with varying levels of priority.

Creditors who have a property or other asset as collateral for their debt. They have a higher priority than unsecured creditors.

Creditors who have a legal right to be paid before unsecured creditors but after secured creditors. Examples include employees for work done during the insolvency period.

Creditors who do not have any collateral for their debt and are therefore paid after secured and preferent creditors.

The process of formal liquidation in a company where the company's assets are sold by a court-appointed liquidator and distributed to creditors.

A person appointed by a court to take control of a company's assets during liquidation, sell them off and distribute the proceeds to creditors. They are responsible for ensuring fair and equitable distribution.

A meeting of creditors held after a sequestration order is issued. It's intended for creditors to prove their claims, appoint a trustee, provide directions to the trustee, and question the insolvent.

A meeting of creditors arranged by the Master of the High Court to allow creditors to submit proof of their claims. The trustee provides a report on the state of the insolvent's affairs, and creditors can give further directions.

A meeting called by the trustee at the request of a creditor (who pays the costs) to prove a claim against a specific debtor. This meeting is necessary when a creditor needs to prove their claim.

A meeting called by the trustee (when required by the Master or creditors representing a quarter of the total value of claims). It's meant to get direction from creditors on any matter related to administering the estate.

A person appointed by creditors to manage the insolvent's estate for the benefit of all creditors. They must act responsibly and not harm the insolvent's estate.

The official appointed by the High Court to oversee the insolvency process. They ensure the process runs smoothly and may adjust the trustee's compensation.

A legal process where a court appoints a person to manage a company's assets, pay debts, and distribute any remaining funds to creditors.

Someone who applies to have their assets managed by a court-appointed official to pay off debts and distribute any remaining funds to creditors.

A legal process initiated by a court to manage a company's assets, pay debts, and distribute any remaining funds to creditors.

A legal process initiated by the company's members or creditors to manage a company's assets, pay debts, and distribute any remaining funds to creditors.

An entity that can't be 'sequestrated' as it's regulated differently.

A person who owes money to others.

A company's transformation from a voluntary winding-up process to a court-ordered winding-up, often triggered by a Business Rescue Practitioner's assessment that the company cannot be saved.

A process where a court-appointed person assesses if a struggling company can be saved. If not, they may recommend conversion to court-ordered winding-up.

This occurs if directors cannot agree on decisions, leading to a deadlock. Stakeholders like shareholders, directors, or the company itself can apply for winding-up.

This occurs if a shareholder detects fraud, illegal activities, or misuse of assets by the company. They can initiate winding-up proceedings.

If a company doesn't comply with notices related to fraud or illegal activities, the CIPC (Companies and Intellectual Property Commission) or Takeover Regulation Panel can request a court to wind up the company.

When a company is no longer able to pay its debts, it's in a state of insolvency and can be wound up.

A liquidator is appointed by the court to oversee the selling of a company's assets and distributing the proceeds to creditors. This process often occurs in the case of insolvency.

The Master of the High Court, a key official during winding-up, takes control of the company's property until a liquidator is appointed. This ensures the assets are protected.

A director, promoter or officer of a company can be ordered by a court to repay money or restore property to the company.

A member of a close corporation can be held personally liable, along with the company, for debts and liabilities.

This type of liability arises when a close corporation operates recklessly or with the intent to defraud creditors.

A court can disregard the separate legal existence of a close corporation and hold individuals personally liable if there's abuse of the company's separate identity.

If a close corporation is unable to pay its debts, payments made to members within two years before winding-up may be recovered by the liquidator if certain solvency requirements were not met.

This liability arises when the close corporation is unable to pay its debts and the payments to members were made within two years before winding-up, while not complying with solvency and liquidity requirements.

Court may declare a director, promoter or officer personally liable for any debt or obligation of the company.

The Close Corporations Act imposes personal liability for non-compliance with its provisions.

A legal agreement between a company facing financial difficulties and its creditors, where the company proposes a plan to pay back its debts, often over a period of time. This arrangement can be a more favorable option for creditors than forcing the company into liquidation (winding up).

A court process where a company facing financial difficulty proposes a plan to its creditors, aiming to pay back its debts in a way that is considered fair by the court. This involves specific steps, including obtaining approval from a class of creditors and applying to the court for "sanctioning" (approval) of the agreement.

A legal arrangement where an insolvent person or company proposes a payment plan to their creditors, aiming to settle their debts. This alternative to formal sequestration (bankruptcy) allows the insolvent party to retain some control over their assets while also seeking a path to financial recovery.

A process where a creditor or a group of creditors can apply to have a company's assets formally liquidated (sold off) to pay off their debts, usually because the company is insolvent and unable to meet its financial obligations.

A legal procedure where a company is formally dissolved, and its assets are sold off to pay its creditors. The process is overseen by a court-appointed liquidator who ensures creditors are paid according to their priority.