company law

Paradise Ltd imports furniture from India. Adam is the managing director and there are three other directors. In 2009, the board decided to set up a retail business

and created a wholly owned subsidiary, Indus Ltd for the purpose. The registered office of Indus Ltd is the same as that of Paradise Ltd and Paradise Ltd is a director

(but not the sole director) of Indus Ltd.

The retail business was successful until late 2010 when other companies continued to supply the company only on Adams assurance that Paradise Ltd would give Indus Ltd

financial support. By June 2011, Indus Ltd could not pay its debts as they fell due. It continued trading until February 2012 when it went into insolvent liquidation.

Advise the liquidator of Indus Ltd of any common law or statutory liability of Paradise Ltd and its directors for Indus Ltd?s debts.
For problem question start with it
problem question :
1)Statute ( limited liability act 1856 s 2) , then company law act 2006 s3(1) , s7(2).
2)Salomon v Salomon & Co [1897]. As a test. Just use the held of the case and the reason of the case don?t use the fact .
3)the application of Salomon case which is Macaura v Northern Assurance Co Ltd [1925] AC 619 and Lee (Catherine) v. Lee’s Air Farming Ltd.,(1961)
4)start lifting the veil with the common law exception 1) sham situation and use Jones v Lipman. [1962] and Trustor AB v Smallbone (No 2) [2001]
5) Re Bugle Press Ltd; ChD 1961
6)Then group exception and use case of DHN Food Distributors Ltd. V. Tower Hamlets London [1976] and Woolfson -v- Strathclyde Regional council [1978] and Adams -v-

Cape Industries plc; CA[ 1990] and Ord v Belhaven Pubs Ltd [1998] and Connelly v RTZ Corporation plc
7) Then the agency exception : use case of Adams -v- Cape Industries plc; CA[ 1990] Creasey v. Breachwood Motors Ltd[1992]
8)Then use the supreme court case VTB Capital Plc v Nutritek International Corp & Ors [2013] and Prest v Petrodel Resources Ltd[2013]
9)Companies Act 2006: ss.761,762,767 (plc certificate to commence trade)
10)ss.399, 403 (group accounts must be prepared)
11)Then the statutory exception which is in fraudulent trading S213 of insolvency act 1986, and use case of Re Augustus Barnett & Son Ltd[1989]
12)Then the second statutory exception which is wrongful trading S214 of insolvency act 1986 and use case Re Produce Marketing Consortium Ltd (No 2)[1989] and use

Judgment of Knox .
13)Then bout the differences between the fraudulent trading and the wrongful trading
14)The contravening disqualification order : S15 company directors disqualification act 1986
15)Finally the conclusion .
16)Please pleas don?t put the fact of the cases only the reason of the cases and the held or judgment of the court .


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