Insolvent Liquidation of Plumbers Express Ltd

Insolvent Liquidation of Plumbers Express Ltd

Insolvent Liquidation of Plumbers Express Ltd

Introduction

Charlie, Edwin and Adam are partners in the business of plumbing, they have been working together for the last two years. Their business was very successful as they all have their own clients, they have fixed their prices. They started their business under the name of “PLUMBERS EXPRESS”, however their was no profit sharing between them because of their own clients. They were contributing jointly in an insurance policy and the general expenses were contributed by them equally. They decided to convert their business into a private limited compnay and they form Plumbers Express Ltd at the beginning of April. Charlie bought the rented premisis for £150,000 and they instructed the solicitors to come up with all the necessary documents and also to register the company. The company was registered on May and Charlie, Edwin and Adam were the sole shareholders and also the directors of that company. Edwin bought a computer and a printer from Computers Galore Ltd at the price of £ 3,500 for the company. Soon after the insorporation of Plumbers Express Ltd, Charlie sold his building to a new company for £ 200,000. A resolution was passed which ratifies the contract with Computers Galore and sale of the Charlie's building, on May 15 they received a letter at their business address from Plumbers Mate Ltd, demanding the payment for materials that was bought by Adam and had not been paid yet. As a result of mismanagement, the Plumbers Express Ltd went into insolvent liquidation.

Insolvent Liquidation of the Plumbers Express Ltd

This article is focused on the problems of insolvency and indebtedness faced by the Plumbers Express Ltd, presenting and analysing the legal structure of the Business Law. According to the analysis, the Plumbers Express Ltd must trustworthily deserve, in a moral sense, the legal opportunity of clearing its debts. The clearing of the debt must be pointed out as fair and proved, through the quality of effort and sacrifice. In simple terms, a compnay is insolvent if it cannot pay their debts as they fall due. However, company will only be able to borrow fully against expected future income streams if capital markets function perfectly. In practice, credit constraints and other market imperfections are likely to limit a company capacity to borrow and insolvency may arise even if the lifetime budget constraint is not violated. Of course, borrowing against future income may bring its own problems, as a higher level of indebtedness implies greater exposure to the impact of unanticipated income shocks. Indeed, many major economies have seen consumer indebtedness rise sharply in recent years. The preceding discussion suggests that the fundamental economic factors influencing insolvency rates are interest rates, current disposable income, expected future income, asset values, debt levels and credit availability. Some of these factors, such as interest rates, may be largely determined at the national level and impact on overall insolvency rates rather than their spatial ...