When an Administrator Is Appointed to a Company They Must

question 15

Multiple Choice

When an administrator is appointed to a company they must give an opinion as to the best of three options available to creditors. These three options are:
I. Wind up the company and appoint a liquidator.
II. End the voluntary administration and appoint a receiver.
III. End the voluntary administration and return the company to the director's control.
IV. Approve a deed of company arrangement through which the company will pay all or part of its debts and then be free of those debts.

• A) I, II and III
• B) I, II and IV
• C) I, III and IV
• D) II, III and IV

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Definitions:

Contingent Liability

A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the company's control.

Possible Obligation

A potential future outflow of resources embodying economic benefits, arising from past events, whose existence will be confirmed only by uncertain future events.

Uncertain Future Event

A potential occurrence or situation whose outcome cannot be predicted with certainty, often impacting planning and decision-making.

Economicbenefits

The potential to bring about advantages in terms of increased cash flows or reduced cash outflows, contributing to the value of an entity.