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ACCA Applied Skills · Corporate and Business Law (Global) · Insolvency and administration

Ms Rao is appointed administrator of Alder Engineering Ltd. In performing her functions, to whom does she owe her primary duty, and whose agent is she treated as being?

An administrator acts in the interests of the creditors as a whole and acts as the company's agent when dealing with its affairs. She is not the agent of the directors, shareholders or only the appointing secured creditor.

  1. AShe acts in the interests of the creditors as a whole and acts as the company's agentCorrect
  2. BShe acts solely for the directors and is their agent
  3. CShe acts solely for the shareholders and is their agent
  4. DShe acts for the secured creditor who appointed her and is that creditor's agent

Explanation

An administrator must perform functions in the interests of the company's creditors as a whole and is an officer of the court. She acts as the company's agent, so she is not personally liable on the contracts she makes in that role in the way a principal would be. Acting solely for directors, shareholders or the appointing creditor is incorrect.

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