Ideas now has some serious financial difficulties. Ideas has not submitted $125,000 in CPP and EI to the federal government for the past 18 months. The Royal Bank has a $1.2 million dollar loan backed by a general security agreement on Ideas but Ideas has missed the past 3 loan payments totaling $50,000. Toronto Hydro is owed $15,000 by Ideas for electricity bills not paid and Office Supplies Ltd. is also owed $35,000 and wants to be paid or it plans to take back its office equipment. Ted Snow is the president of Ideas and he called an emergency meeting of the Ideas board of directors this week. The company agreed to pay its worried preferred shareholders a dividend costing the company $40,000 and it also gave its 5 directors a bonus of $5,000 each. There are 20 Ideas workers who each make $1,000 per week and they have not been paid in 4 weeks. Discuss fully what would happen if Ideas creditors try to force it into bankruptcy and what options Ideas has. Ideas is hoping to stay in business. Outline the steps and the rights of all the parties and the directors’ legal position.

Answer rating: 100% (QA)

Leasons There are situation when the company owe money to nere ... View the full answer