Fab Funerals LTD is a business that conducts funerals and sells funeral plans. it has 3 shareholders Alice, Candice and Danielle. They are also the directors of the company.

Although FF began as a small company in 2018, it expanded rapidly. By 2020 it was .... a large profit. However in 2021 for various and social lifestyle reasons FFs business did not peform as well. The directors decided to act as in an attempt to reverse the decline. Although FF was carrying significant debt already it was able to meet its commitments at that time as a result Alice and Candice decided at a directors meeting to take risk they decided to borrow an additional $1 million to upgrade FFs fleet of hearses, its computer equipment and run an advertising campaign.

FF applied for and obtained the 1 million loan from Levee bank in 2021 June. It spent part of the money on computer hardware amd software system purchased from Orange electronics. it was a very good deal. However it is worth knowing that OE is a company owned by Alices family. This fact was not revelead to the FFs shareholders. (who are also other directors of the company)

After 3 months FF has defaulted on its debt repayments to the creditors and as a result a liquidator was appointed. Taking the $1 million loan and increasing FFs debt levels was a poor decision.

Are Candice, alice and Danielle personally liable to repay the $1 million loan according to the cooperations act 2001. And has Alice breached her position as director according to cooperations act 2001 in relation to the computer supply contract?

Answer rating: 100% (QA)

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