Building model Airplanes
1:Imagine you are a service-disabled veteran and have made your hobby of building model airplanes into a small business that produces very small remote control aircraft capable of long sustained flights. You are ready to expand your business by competing for Department of Homeland Security contracts.
Write a two to three (2-3) page paper in which you:
Determine at least three (3) specific programs created by Congress that benefit your business.
Analyze the small-business programs created by Congress and provide details of how they will benefit your company over large multinational organizations that build aircrafts (e.g., Lockheed Martin).
Use at least three (3) quality resources in this assignment. Note: Wikipedia and similar Websites do not qualify as quality resources.
2:DISCUSSION.
The law regarding corporate insolvency is included in the insolvency act 1986 and the recent Insolvency Rules. When directors know that the companies does not have enough solvency to operate, they have two options. 1) to voluntary wound up the company[1] by a) making a declaration of solvency done by the members and 2) doing a compulsory winding up which requires a court order. According to section 122 of the Insolvency Act 1986 indicates in situations in which a company can be wound up by the court. Moreover, according to the Section 116 “the voluntary winding up of a company does not bar the right of any creditor or contributory to have it wound up by the court”[2]. Creditors have protection when it comes to company insolvency riles indicated on the Insolvency Act 1986. According to Section 122 (1) (f) a company is not able to pay its debts when the following situations happens:
A creditor owed more 5000 pounds has served a formal demand on the company
The creditor has obtained judgment against the company and the debts is unsatisfied
It is proven that the debt is unable to be paid
It is proven that the amount of the company’s assets is less than the amount of the liabilities.
According to the case Commissioner of Customs & Excise v Arena Corporation Ltd[3] the court considers relevant factors and can dismiss the petition if the company is able to show that it can recover from its debts. As per the Cork Report [4] states the insolvency laws that have been put in place to 1) serve as an instrument when recovering the debt and 2) serves as a mean by which the demands of commercial morality can be met. Additionally, Section 206-11 of the Insolvency Act 1986 states the criminal offences for directors breaching their duty. Also, the Company Act 2006 section 993 indicates the “fraudulent trading”[5] ; however, the number of prosecution is very low. Therefore, directors can be prosecuted for breaching their fiduciary duty and can also guilty for misfeasance. Shareholders can hire a liquidator to evaluate whether the directors were carrying the business in a fraudulent manner and make directors liable for the losses. The mentioned laws have been implemented to protect creditors so that they can invest in companies where they trust.
[1] Insolvency Act 1986, Section 84
[2] Insolvency Act 1986, Section 116
[3] [2010] EWHC 37 Ch
[4] Report of the Review Committee on Insolvency Law Practice (Cmnd 8558, June 1982)