Monday 10 March 2025
Your weekly SQE Prep Quiz has arrived
Dear Subscriber,
I hope you had a great weekend! Please see below for the question, the answer to the previous question and associated resources. You can view a web version of this newsletter by clicking here.
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Question: Daniel is a recent law graduate in England and is considering his career options. He is unsure whether to qualify as a solicitor or a barrister and wants to understand the key differences between the two professions. He is particularly interested in advocacy, advising clients, and understanding the ethical obligations of legal practitioners. While researching, Daniel learns that both solicitors and barristers must adhere to professional codes of conduct and that their ethical duties can sometimes differ, particularly in their obligations towards clients, the court, and confidentiality.
Which of the following best describes the key differences between solicitors and barristers, including their ethical responsibilities?
1. Barristers specialize in advocacy and have a duty to the court to remain independent, while solicitors focus on legal advice and client representation, with a duty to act in the client’s best interests while upholding the law.
2. Solicitors and barristers have identical ethical duties, with no distinction in their obligations towards clients or the court.
3. Solicitors are only responsible for acting in their client’s best interests, while barristers have an overriding duty to win cases, regardless of ethical concerns.
4. Barristers can only act if instructed by solicitors, meaning they do not owe independent ethical duties towards clients.
5. Solicitors and barristers are not subject to professional regulation, as ethical considerations in law are purely discretionary.
Resource: Learn more about solicitor ethics by watching this video. Pick up a copy of our free study planner here.
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Answer and feedback to last week’s question: GreenTech Ltd., a renewable energy company, has gone into insolvent liquidation after failing to repay its debts. The company has £5 million in outstanding liabilities but only £2 million in assets available for distribution among creditors.
GreenTech Ltd. owes money to several parties, including:
• Secured creditors with a fixed charge (e.g., a bank that lent money secured against GreenTech’s headquarters).
• Employees who are owed wages and redundancy payments.
• HM Revenue & Customs (HMRC) for unpaid VAT and corporation tax.
• Unsecured trade creditors (e.g., suppliers who provided equipment and services).
• Shareholders, who are expecting to recover part of their investment.
The liquidator must now distribute the company’s remaining assets in accordance with the statutory order of priority under UK insolvency law.
In what order will GreenTech Ltd.’s assets be distributed among its creditors in an insolvent liquidation?
1. Secured creditors (fixed charge), preferential creditors (employees), HMRC, unsecured creditors, shareholders.
2. Unsecured creditors, secured creditors, HMRC, preferential creditors, shareholders.
3. HMRC, secured creditors (fixed charge), unsecured creditors, preferential creditors, shareholders.
4. Shareholders, preferential creditors, secured creditors, unsecured creditors, HMRC.
5. Preferential creditors (employees), unsecured creditors, secured creditors, shareholders, HMRC.
Correct Answer: 1.Secured creditors (fixed charge), preferential creditors (employees), HMRC, unsecured creditors, shareholders. Explanation: Under UK insolvency law, particularly the Insolvency Act 1986, the assets of an insolvent company are distributed in a strict order: Secured Creditors (Fixed Charge Holders – creditors with a fixed charge (e.g., a bank with security over company property) are paid first from the proceeds of selling those secured assets); Preferential Creditors (Includes employees owed wages (up to a statutory limit) and redundancy payments – they have priority over unsecured creditors but rank below secured creditors); HM Revenue & Customs (HMRC) – Secondary Preferential Creditor (Since December 2020, HMRC has regained secondary preferential status for unpaid VAT, PAYE, and NICs under the Finance Act 2020 – this means HMRC is paid before unsecured creditors but after preferential employee claims); Unsecured Creditors (Trade Creditors & Unsecured Loans), includes suppliers, landlords, and customers owed refunds, they are paid only after all secured and preferential creditors have been satisfied; Shareholders, shareholders are last in line and typically receive nothing unless all creditors have been fully repaid (which rarely happens in an insolvent liquidation).
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Dr Ioannis Glinavos
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