Questions:

1.

Mira is director of a company that is selling flowers at Waterfront, Casuarina and Palmerston. The flower company has had three years of poor trading and is now unable to pay its debts when they fall due.  Mira seeks your advice on the options available in the circumstances. She is concerned the company may be insolvent but is hopeful that the NT economy will improve, and her business will flourish soon.

Required:

a) Explain the options available to Mira if she suspects the company is insolvent. What would be the potential benefit to her if she appoints a Voluntary Administrator?

b) What sort of risks could Mira face if she borrows more money to help the company but then can’t pay it back?

2.

Barry Badler is the CEO of HealthCo Pty Ltd (‘HealthCo’), a major supplier of medical equipment in the Northern Territory. Barry also has a broad range of personal investments in a number of companies. These investments are managed by his superannuation trustee (his wife) and he has no direct control over the trust. Lately, his wife has been investing the trust funds into a number of medical supply companies including MediCall Ltd(‘MediCall’), in which she has built up a 10% stake. She has not told Barry about her investment strategy.

In early August, HealthCo considers a tendering process for one of its major supply contracts. MediCall lodges a tender bid and Barry is on the tender committee. As a result of Barry’s recommendation, MediCall wins the tender contract.

In October, Barry takes over control of his superannuation trust and builds up a further stake in MediCall so that his trust controls 19% of the company. Barry then pressures the company to appoint his wife to the board of directors.

Required:

Advise Barry of his obligations under the Corporations Act arising from his dealings with MediCall. Were his actions in August and October in breach of the no-conflict rule?

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