Insolvency – Page 3

RM – JUL 2020 – L4 – Q1 – Capital Inadequacy and Measures to Bolster CAR

Discuss measures a bank can take to improve a declining Capital Adequacy Ratio to prevent insolvency or sanctions, referencing recent Ghanaian bank collapses.

Question

Capital inadequacy (low or negative Capital Adequacy Ratio, below 10%) featured prominently in the financials culminating into the recent collapse of some banks in Ghana.

What measures may a bank take to bolster its declining ratio to avoid insolvency or regulatory sanctions?

Answer

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Tags: Bank Collapse, Capital Adequacy Ratio, Ghana Banking Cleanup, Insolvency, Regulatory Sanctions
Level: Level 4

Topic: Capital Adequacy
Series: JULY 2020

POB-LAW-APR-2016-L3-Q6-Debentures and Administrative Receivers

Scenario where a securities clerk asks the branch manager to explain what a debenture is, why the credit director requests a debenture over fixed and floating assets instead of just a fixed charge, and details on the meaning, appointment, and role of an administrative receiver for a company.

Question

As the Branch Manager of your High Street Branch in Accen, your Securities Clerk asks you the following questions:
a. We submitted any application to the Director/Credit showing the following details of Account X Ltd

Proposed Limit: GH$500,000,000;
Proposed Security: Fixed Charge over the factory, minimum forced sale value (FSV) GH$1,500,000,000 on a professional valuation.
The Director/Credit’s office has agreed to lend, but have expressed dissatisfaction with the security and have requested us to take a Debenture under.
Explain the following to your Clerk:
i. What is a Debenture?
ii. Why is the Director/Credit’s’ office requesting for a debenture over the company’s fixed and floating assets?
b. I have read some correspondence about the appointment of an “Administrative Receiver” for Z Limited. Can you explain what “Administrative Receiver” means, how the administrative receiver is appointed and what the administrative receiver does?

Answer

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Tags: Administrative Receiver, Appointment, Companies Act, Company Securities, Debenture, Duties, Fixed Charge, Floating Charge, Insolvency, Receivership
Level: Level 3

Topic: Securities Acceptable to Bankers
Series: APRIL 2016

PBL – APR 2014 – L1 – Q5 – Grounds for Court-Ordered Winding Up of a Company

Grounds on which a court will order the winding up of a company.

Question

On what grounds will the Court order the winding up of a company?

Answer

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Tags: Companies Code 1963, Company Liquidation, Court Orders, Grounds for Winding Up, Insolvency, Just and Equitable, Winding-up
Level: Level 1

Topic: Contract Law
Series: APRIL 2014

AAA – Nov 2012 – L3 – AII – Q12 – Auditor’s Legal Liability

Identifies the type of creditors given priority in payment during a liquidation process.

Question

The creditors given priority payment during a liquidation process are known as …………………. creditors.

Answer

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Tags: Creditors, Insolvency, Legal Liability, Liquidation, Priority Payment
Level: Level 3

Topic: Auditor’s Legal Liability
Series: NOV 2012

AAA – Nov 2012 – L3 – SA – Q18 – Auditor’s Legal Liability

Identifying debtor categories exempt from bankruptcy declaration under Nigerian law.

Question

The following categories of debtors may be declared bankrupt (according to Bankruptcy Law in Nigeria) EXCEPT:

A. A debtor owing a liquidated sum of at least N2,000 (Two Thousand Naira only).
B. A debtor who has committed an act of bankruptcy within 3 months before presentation of bankruptcy petition.
C. Any debtor domiciled in Nigeria or who has carried on business in Nigeria by means of an agent or a manager.
D. A debtor that makes any conveyance or transfer of his property or any part thereof if he were adjudged bankrupt.
E. A debtor who transacts business in Nigeria and is able to meet his obligation as at when they fall due.

Answer

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Tags: Bankruptcy Law, Debtors, Insolvency, Legal Liability, Nigeria Law
Level: Level 3

Topic: Auditor’s Legal Liability
Series: NOV 2012

AAA – Nov 2011 – L3 – SAII – Q17 – Review of Subsequent Events and Going Concern Assumptions

Definition of a company's inability to meet financial obligations on time.

Question

The inability of a company to meet its financial obligations as and when due is called……………..

Answer

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Tags: Company Obligations, Financial obligations, Insolvency, Liquidity
Level: Level 3

Topic: Review of Subsequent Events and Going Concern Assumptions
Series: NOV 2011

BL – Nov 2020 – L1 – SB – Q2c – Company Law

Differentiate insolvency from bankruptcy and outline consequences of insolvency.

Question

Insolvency occurs when a company is unable to pay its debts.

Required:
i. Distinguish insolvency from bankruptcy.
ii. Explain briefly the consequences of insolvency on a company.

Answer

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Tags: Bankruptcy, Corporate Consequences, Financial Distress, Insolvency
Level: Level 1

Topic: Company Law
Series: NOV 2020

BL – Nov 2020 – L1 – SA – Q5 – Company Law

Objective question testing knowledge on company financial status related to solvency.

Question

5. A company whose liabilities exceed its assets is said to be
A. Buoyant
B. Broke
C. Rich
D. Insolvent
E. Pauperised

Answer

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Tags: Company Liabilities, Financial Terms, Insolvency, Solvency
Level: Level 1

Topic: Company Law
Series: NOV 2020

BL – May 2013 – L1 – SA – Q20 – Law of Trusts

This question tests knowledge of which entities cannot be declared bankrupt.

Question

Which of the following CANNOT be made a bankrupt?

A. A company
B. A Nigerian
C. A partnership
D. A foreigner who lives in Nigeria
E. A foreigner who has a place of business in Nigeria

Answer

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Tags: Bankruptcy, Insolvency, Legal Status
Level: Level 1

Topic: Law of Trusts
Series: MAY 2013

BL – May 2013 – L1 – SA – Q11 – Law Relating to Banking

This question tests the knowledge of the official responsible for administering a debtor's estate in bankruptcy.

Question

The person charged with the duty of administering a debtor’s estate in a bankruptcy proceeding is known as the:

A. Liquidator
B. Official Receiver
C. Registrar of the Supreme Court
D. Auctioneer
E. Executor

Answer

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Tags: Bankruptcy, Insolvency, Official Receiver
Level: Level 1

Topic: Law Relating to Banking
Series: MAY 2013

BL – Nov 2023 – L1 – SB – Q5d – Company Law

Discusses the types of insolvency practitioners and the qualifications required to practice in Nigeria.

Question

Corporate insolvency occurs when a company is unable to meet its financial obligations.

Required:
i. State TWO insolvency practitioners. (2 Marks)
ii. State THREE qualifications that an insolvency practitioner must possess. (3 Marks)

Answer

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Tags: Corporate Law, Insolvency, Liquidation, Practitioners
Level: Level 1

Topic: Company Law
Series: NOV 2023

BL – Nov 2023 – L1 – SA – Q9 – Business Ethics and Corporate Governance

This question asks who secured creditors have the right to appoint when a company is in financial difficulty.

Question

As an alternative to liquidation, where a company is in financial difficulty the secured creditors have a right to appoint a
A. Director to manage the assets
B. Banker to manage the assets
C. Chairman to manage the assets
D. Receiver/manager to manage the assets
E. Stockbroker to manage the assets

Answer

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Tags: Corporate Law, Insolvency, Receivership
Level: Level 1

Topic: Business Ethics and Corporate Governance
Series: NOV 2023

BL – Nov 2019 – L1 – SB – Q4a Contract Law

Conditions under which a company may be placed in receivership.

Question

An insolvent company has several alternatives to liquidation.
Required:
State FOUR conditions under which a company may be placed in receivership. (4 Marks)

Answer

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Tags: Company Law, Insolvency, Liquidation, Receivership
Level: Level 1

Topic: Contract Law
Series: NOV 2019

BL – May 2017 – L1 – SA – Q6 – Company Law

Identifying non-inclusion in the tests for insolvency under Companies and Allied Matters Act.

Question

Under the Companies and Allied Matters Act, the tests for insolvency do NOT include
A. Inability of a company to pay a debt exceeding ₦2,000 three weeks after demand
B. The existence of court process issued in respect of a judgment debt
C. A court ruling that the company is unable to pay its debts
D. The existence of company’s liability in excess of its assets
E. Outstanding debts owed by the company in excess of one billion naira

Answer

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Tags: Company Law, Insolvency, Legal Tests
Level: Level 1

Topic: Company Law
Series: MAY 2017

BL – MarJul 2020 – L1 – SA – Q5 – Company Law

Question assessing the role of a receiver/manager in managing the assets of an insolvent company.

Question

A person appointed by the secured creditors to manage the assets of an insolvent company is
A. Bailiff
B. Auctioneer
C. Debt Collector
D. Accounts Officer
E. Receiver/Manager

Answer

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Tags: Company Law, Insolvency, Management, Secured Creditors
Level: Level 1

Topic: Company Law
Series: MAR/JULY 2020

BL – May 2016 – L1 – SB – Q5b – Company Law

Identify six circumstances under which a company can be placed under receivership.

Question

State SIX circumstances under which a company can be placed under Receivership.

Answer

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Tags: Corporate Governance, Insolvency, Receivership
Level: Level 1

Topic: Company Law
Series: MAY 2016

BL – May 2024 – L1 – SA – Q6 – Company Law

Identify the two types of insolvency recognized by law.

Question

The two types of insolvency recognized by the law are
A. Directors’ and shareholders’ insolvency
B. Members and company insolvency
C. CAC and company insolvency
D. Corporate and personal insolvency
E. Receiver and shareholders insolvency

Answer

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Tags: Company Law, Corporate Law, Insolvency, Personal Insolvency
Level: Level 1

Topic: Company Law
Series: MAY 2024

BL – May 2016 – L1 – SA – Q6 – Business Ethics and Corporate Governance

Identify the amount that triggers insolvency for unpaid debts within a specific period.

Question

A company is said to be insolvent when it is unable to pay its debts within three weeks after a written demand for the payment of an amount of money exceeding
A. ₦1,500
B. ₦2,000
C. ₦5,000
D. ₦7,500
E. ₦10,000

Answer

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Tags: Business Obligations, Debt Repayment, Insolvency
Level: Level 1

Topic: Business Ethics and Corporate Governance
Series: MAY 2016

BL – May 2024 – L1 – SA – Q3 – Company Law

Eligibility for appointment as an administrator of a company.

Question

Who among the following is eligible to be appointed as an administrator of a company?
A. A chartered accountant
B. A legal practitioner
C. Administrator-General
D. An insolvency practitioner
E. A public administrator

Answer

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Tags: Company Administration, Corporate Law, Insolvency
Level: Level 1

Topic: Company Law
Series: MAY 2024

BL – May 2015 – L1 – SB – Q1c – Company Law

Explain the term "Insolvency" and state four consequences of insolvency.

Question

An insolvent person cannot properly manage his personal affairs.
i. Explain briefly the term “Insolvency”. (2 Marks)
ii. State FOUR consequences of Insolvency. (4 Marks)

Answer

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Tags: Bankruptcy, Insolvency, Personal Affairs
Level: Level 1

Series: MAY 2015

Question Tag: Insolvency

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RM – JUL 2020 – L4 – Q1 – Capital Inadequacy and Measures to Bolster CAR

Discuss measures a bank can take to improve a declining Capital Adequacy Ratio to prevent insolvency or sanctions, referencing recent Ghanaian bank collapses.

You're reporting an error for "RM – JUL 2020 – L4 – Q1 – Capital Inadequacy and Measures to Bolster CAR"

POB-LAW-APR-2016-L3-Q6-Debentures and Administrative Receivers

Scenario where a securities clerk asks the branch manager to explain what a debenture is, why the credit director requests a debenture over fixed and floating assets instead of just a fixed charge, and details on the meaning, appointment, and role of an administrative receiver for a company.

You're reporting an error for "POB-LAW-APR-2016-L3-Q6-Debentures and Administrative Receivers"

PBL – APR 2014 – L1 – Q5 – Grounds for Court-Ordered Winding Up of a Company

Grounds on which a court will order the winding up of a company.

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AAA – Nov 2012 – L3 – AII – Q12 – Auditor’s Legal Liability

Identifies the type of creditors given priority in payment during a liquidation process.

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AAA – Nov 2012 – L3 – SA – Q18 – Auditor’s Legal Liability

Identifying debtor categories exempt from bankruptcy declaration under Nigerian law.

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AAA – Nov 2011 – L3 – SAII – Q17 – Review of Subsequent Events and Going Concern Assumptions

Definition of a company's inability to meet financial obligations on time.

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BL – Nov 2020 – L1 – SB – Q2c – Company Law

Differentiate insolvency from bankruptcy and outline consequences of insolvency.

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BL – Nov 2020 – L1 – SA – Q5 – Company Law

Objective question testing knowledge on company financial status related to solvency.

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BL – May 2013 – L1 – SA – Q20 – Law of Trusts

This question tests knowledge of which entities cannot be declared bankrupt.

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BL – May 2013 – L1 – SA – Q11 – Law Relating to Banking

This question tests the knowledge of the official responsible for administering a debtor's estate in bankruptcy.

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BL – Nov 2023 – L1 – SB – Q5d – Company Law

Discusses the types of insolvency practitioners and the qualifications required to practice in Nigeria.

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BL – Nov 2023 – L1 – SA – Q9 – Business Ethics and Corporate Governance

This question asks who secured creditors have the right to appoint when a company is in financial difficulty.

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BL – Nov 2019 – L1 – SB – Q4a Contract Law

Conditions under which a company may be placed in receivership.

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BL – May 2017 – L1 – SA – Q6 – Company Law

Identifying non-inclusion in the tests for insolvency under Companies and Allied Matters Act.

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BL – MarJul 2020 – L1 – SA – Q5 – Company Law

Question assessing the role of a receiver/manager in managing the assets of an insolvent company.

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BL – May 2016 – L1 – SB – Q5b – Company Law

Identify six circumstances under which a company can be placed under receivership.

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BL – May 2024 – L1 – SA – Q6 – Company Law

Identify the two types of insolvency recognized by law.

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BL – May 2016 – L1 – SA – Q6 – Business Ethics and Corporate Governance

Identify the amount that triggers insolvency for unpaid debts within a specific period.

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BL – May 2024 – L1 – SA – Q3 – Company Law

Eligibility for appointment as an administrator of a company.

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BL – May 2015 – L1 – SB – Q1c – Company Law

Explain the term "Insolvency" and state four consequences of insolvency.

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