Tutorial 11 Insolvency and DLC PDF

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Tutorial Topic 11 Insolvency Part A

True or False? ( with an explanation and/or reference to justify your answer) 1.

When a debtor faces insolvency, an unsecured creditor will be in a better position to recover the debt from that person than a secured creditor.

2.

The term a ’bankruptcy’ is only used in relation to a legal process affecting individuals or partnerships, not companies

3.

Receivership and winding-up of a company are the same thing

4.

In many instances, a receivership of a company occurs because of a default under a security agreement or debenture.

Part B 1.

Aspen Bank Ltd claims that Murdoch Pty Ltd owes it $5,000 for an unpaid loan which is unsecured. The debt is well 3 months overdue and Aspen believes that Murdoch Pty Ltd may be insolvent. Explain the procedure under the Corporations Act 2001 that Aspen should follow to seek a winding up of Murdoch Pty Ltd. What will be the role of a liquidator if the winding up procedure is successful?

1

Part C. Indicate to whom these legal processes could apply:

Party



Individual ( consumer debts)



Sole trader

Bankruptcy

Receivership

Winding up

Voluntary Administration

Partnership

Company

2

Documentary Letter of Credit

Part A 1. Explain a documentary letter of credit (DLC) and identify its essential features. 2. List the benefits of a DLC.

3...