COMPANY LAW

Company Law

Company Law

Introduction

The issue of liquidation is the core topic of this assignment. The case revolves around the company known as Zed Ltd. Zed Ltd has faced the problems of cash flows in the past and it has borrowed a lot of money, as a result, from different lenders to counter the issue of cash flow. The major problem in the case is the petition filed for liquidation by one of the major trade creditors of Zed Ltd. The date has been also assigned for the liquidation. This development has not been taken favourably by Zed Ltd because they are concerned about their survival. The company is even worried about the past transaction that has taken place with other creditors because these agreements might get affected because of this petition. The latest transaction such as the borrowing of loan by Zed Ltd Company from Janice is facing the highest threat of getting affected because of the current liquidation scenario. Zed Ltd cannot afford to have these agreements cancelled because of their weak cash flows. This is the reason why Zed Ltd needs proper advice from its legal team on this matter in order to resolve the current issue. The legal team would need to review the two sections known as 213-214 Insolvency Act 1986 and 171-177 Companies Act 2006. These two sections of the Corporate Law would certainly assist Zed Ltd to meet the liquation problem in the best possible way.

Q1. It would appear that a company's ability to provide lawful financial assistance for the purchase of its own shares depends heavily on the company involved, and, the rather strict interpretation given to the so-called 'purpose' exception.' To what extent, if any, is this statement true?

There is no doubt that the company's ability to provide lawful financial assistance for the purchase of its own shares depends heavily on the company involved. The larger companies have got a good chance of receiving financial assistance from various monetary institutions. However, the small companies' faces difficulties in receiving financial assistance because of the risk factor associated with them in making the repayments. Some of information related to this factor will be discussed in the upcoming paragraphs. The two clauses mentioned in the preceding paragraph are 213-214 Insolvency Act 1986 and 177 Companies Act 2006. All the information related to their background, application and the benefits it provides to companies under differing circumstances would be discussed in detail. However, the main focus of this research is on the liquidation, so the entire information related to this concept would be covered in detail. The requirements and conditions that must be met for liquidation would be discussed thoroughly in the upcoming paragraphs. Recent years have seen a significant rise in personal insolvencies, in many outstanding economies. In the US, for example, rates of filing for non-business bankruptcy rose from 15 to 54 persons per 10 000 population from 1980 to 2004, whilst, in Canada, personal bankruptcies grew by 87 per cent over ...