- 8 Marks
BL – May 2021 – L1 – SB – Q2b – Company Law
Explanation of creditor claims against a majority shareholder when a company is insolvent.
Question
Adigwe and his two sons caused Adigwe and Sons Limited to be incorporated and became the first directors of the company. The company traded profitably for five years after it was incorporated, but it is about to be wound up because it owes trade creditors a huge amount of money. Adigwe holds 95% of the issued shares of the company while each of his two sons holds 2½%. The creditors of Adigwe and Sons Limited have discovered that the assets of the company are insufficient to satisfy their claims and have filed an action to recover the money from Adigwe who holds most of the shares of the company.
Required:
Explain to the creditors of Adigwe and Sons Limited their chance of succeeding in their claim against Adigwe.
Find Related Questions by Tags, levels, etc.
- Tags: Company Law, Corporate Personality, Creditor Claims, Insolvency
- Level: Level 1
- Topic: Company Law
- Series: MAY 2021