ACCA Applied Skills · Corporate and Business Law (Global) · Insolvency and administration
A court has made a compulsory winding-up order against Eskor Ltd. Which of the following is the effect of the order?
The directors' powers end and the liquidator takes control of the company's affairs and assets. The liquidator realises the assets and distributes the proceeds. Directors do not keep their powers, and employment contracts are generally ended by the winding up.
- AThe directors' powers continue unchanged until the liquidator reports
- BThe company's employees are automatically kept on under their existing contracts
- CThe directors' powers end and the liquidator takes control of the company's affairs and assetsCorrect
Explanation
On a winding-up order, control passes from the directors to the liquidator, who collects and realises assets and distributes proceeds. Employees' contracts are generally terminated by the winding up rather than preserved. Directors' powers do not continue as before.
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