CLAW6002 Insolvency Question 10 and answer .doc

CLAW6002 Insolvency Question 10 and answer .doc - LECTURE...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
LECTURE 11 (WEEK 11 commencing 22 May 2017) Insolvency Facts: Jason, Nick, Calvin, Fiona and Vicky are the directors and shareholders of Shine Products Pty Ltd (“Shine”), a company engaged in the business of importing jewellery and on-selling it to local jewellery store owners. For some time, Shine has been in grave financial difficulty. It operates from small premises worth $900,000 that it owns but its title to those premises is subject to a mortgage to Great Big Bank for an outstanding loan of $800,000. Apart from these premises and its trading stock which currently is worth $50,000, Shine has no other significant assets. Shine does, however, have significant trade debts totalling $100,000 that currently are unpaid. Further, over the last twelve months , Shine’s gross income from the sale of jewellery has been approximately $10,000 per week but its weekly expenses have totalled more than $11,500 (primarily consisting of interest on the outstanding loan as well as importation costs, payroll expenses and customs duties). Some of the directors consider that Shine needs to expand its business in order to improve its position. In order to do so, it is proposed that Shine sells the existing business premises and discharges the mortgage, and then issues $3 million in debentures to Private Equity Ltd, with $1 million to be used to import more stock and $2 million to be used to purchase a new and larger warehouse and showroom from Citadel Properties Pty Ltd. Subsequently, a board meeting is called and the proposal is put as a resolution which the board passes under the following circumstances: (a) Jason does not attend as he is in hospital recovering from serious injuries resulting from a car accident. (b) Nick does not attend because he is too busy, but he quickly signs and returns all the documentation which has been emailed to him.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern