1. Law
  2. Corporation
  3. you must refer to the relevant cases and statutory law...

Question: you must refer to the relevant cases and statutory law...

Question details

Refer to the relevant cases and statutory law in the answer. Reference any material quoted or drawn on.

QUESTION THREE You are a graduate analyst working for a leading insolvency firm. Mark, Travis and Matt are the directors of Blink Property Group Ltd (‘BPG’) – company that acts as a property management agency on behalf of investment property owners. BPG’s registered office is 1/82 Collins Street, Melbourne. BPG does own two beachside holiday houses on the Mornington Peninsula. BPG’s main business proposition, however, was to take care of online rental bookings, key drop, short term luggage storage, cleaning, and all other services for owners. The company decided only to take on short term rentals but provide a guaranteed return to investors. In July 2019, PPG was struggling to pay its outgoings during an extended slump in rental income during the winter months. PPG arranged for extensions of time to pay a supplier of toiletry products and entered into a payment plan with the ATO for its taxes. By December 2019, PPG started receiving solicitors’ letters from some of its property owners demanding payment for unpaid rental income. In February 2020, the directors decided to place the company into voluntary administration. A review of the company’s financial statements reveal that: 

  • In July 2015, PPG took out a mortgage over one of its holiday houses with the Collins Street Bank. 
  • In July 2017, the directors were each paid $50,000 in bonuses following strong financial performance in the previous financial year.
  • In November 2019, PPG paid $10,000 in full to a contractor for electrical works after he threatened to take debt recovery action in the Magistrates’ Court.
  • In January 2020, PPG transferred its interest in one of its Mornington Peninsula properties to Box Car Pty Ltd (the sole director and shareholder of which is Travis) without payment – telling the State Revenue Office it was a corporate restructure and therefore exempt from stamp duty.
  • In February 2020, PPG owed $67,000 in wages and superannuation to its employees.

Your manager has asked you to answer the following questions based on the legal issues raised by the above to assist in drafting the administrator’s report to creditors.

REQUIRED b) If the company is liquidated, what is the order of payment to creditors? 

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution