Maxine King ( sole director and sole shareholder) of Gold Coast Souvenirs Pty Ltd made an appointment to speak to Jessica Jones ( Partner in Griffith Insolvency) in early July last year to discuss her options. Gold Coast Souvenirs Pty
Maxine King ( sole director and sole shareholder) of Gold Coast Souvenirs Pty Ltd made an appointment to speak to Jessica Jones ( Partner in Griffith Insolvency) in early July last year to discuss her options. Gold Coast Souvenirs Pty Ltd was registered over ten years ago as a manufacturer, importer and wholesaler of souvenirs & memorabilia . The company enjoyed significant success in its initial 10 years, however in the last two years the director Maxine King noticed a decline of sales as tourists to the Gold Coast concentrate on acquiring experiences , rather than souvenirs, while holidaying on the Gold Coast. Unfortunately, Gold Coast Souvenirs Pty Ltd had at this time committed to buying two delivery vans and borrowed a significant sum of money to fund the purchase of stock from overseas. Sales continued to decline , well below budgeted figures and the unpopular stock items were considered over-valued. In a last ditch effort to get Gold Coast Souvenirs Pty Ltd on its feet again, and to ensure continued supply of materials and services from creditors, Maxine agreed to guarantee the repayment of the bank overdraft from ANZ.However, Gold Coast Souvenirs Pty Ltd has not recovered its market position and mindful of her liability as Guarantor, Maxine thought it best to consult with Jessica Jones (Partner of Griffith Insolvency) regarding her options. Having spoken to Jessica Jones regarding her potential legal liability for the repayment of the bank overdraft and company debts if Gold Coast Souvenirs Pty Ltd was trading while insolvent, Maxine King, as sole shareholder & director of Gold Coast Souvenirs Pty Ltd, resolved to place the company into liquidation and appoint Jessica Jones as liquidator.
Solvent and insolvent companies can be wound up, the former through a members’ voluntary winding up and the latter through a creditor’s voluntary winding up or a compulsory winding up. The aim of any liquidation is twofold: to wind up the company and to collect and sell the company’s assets to repay creditors and where possible to distribute the surplus, if any, to shareholders.
To achieve these aims, a liquidator is appointed to collect and realise the company’s assets, examine the company’s affairs to determine whether any contraventions of the Corporations Act 2001 have occurred and whether any transactions entered into by the company prior to its winding up can be avoided, thereby increasing the potential pool of assets available to pay creditors and perhaps shareholders.
The determination of the commencement of the liquidation is an important element in this process as from this date the company’s operations change dramatically, which in turn will impact the various company stakeholders. The Liquidator’s powers and obligations will also commence from this time.
NOTIFICATION TO CORPORATE OFFICER OF RESPONSIBILITIES ON LIQUIDATION TAKE NOTICE THAT on 25 July 2019, Gold Coast Souvenirs Pty Ltd ACN 061 666 235 was placed into liquidation and I was appointed Liquidator of the company. I wish to bring to your attention the following important effects and responsibilities arising from the liquidation of the company:
PROPERTY As Liquidator of the company, control of its assets and affairs now rests with me, and the company cannot dispose of property without me permission. Company property will be divisible amongst company creditors and, should a surplus exist, amongst shareholders. As Liquidator, I am empowered to take into my custody or under my control all the property to which the company is or appears to be entitled, and to cause the property of the company to be collected and applied in discharge of its liabilities (Section 506(1)). Property includes any cash at bank held by the company. You are required to disclose to me details of all such property: any failure or refusal to do so is an offence (refer Offences below).
OFFICERS TO HELP LIQUIDATOR You are required to: (a) Deliver to me all books in your possession that relate to the company; and (b) If you know where other books relating to the company are – to tell me where those books are (Section 530(1)). A person must not hinder or obstruct the Liquidator of a company in obtaining possession of books of the company (Section 530B(3)).
ATTENDANCE ON LIQUIDATOR As an officer you must:
(a) Attend on the Liquidator on such times; and
(b) Give the Liquidator such information about the company’s business, property, affairs and financial circumstance; and
(c) Attend such meetings of the company’s creditors and members; As the Liquidator reasonably requires. You must also do whatever the Liquidator reasonably requires you to do to help in the winding up, and to help in the performance and exercise of any of the Liquidator’s functions and powers (Section 530A(2)-(4))
CHANGE OF ADDRESS You are required to inform me of your residential address and work or business address, and keep me informed of any change in either of those addresses during the course of the winding up (Section 530A(5)). DIRECTOR’S POWERS Your powers as director cease on the appointment of a Liquidator.
CO-OPERATION AND DISCLOSURE You are required to (Section 590):
(a) Disclose to me all property of the company that has been disposed of during the last ten (10) years outside of the ordinary course of business;
(b) Deliver up to me all property of the company in your custody or control, and all books belonging to the company in your custody or control;
(c) Reveal any property fraudulently removed from the company in the last ten years. Should you conceal, or without my permission, remove any company property, you are liable to a penalty of $18,000 or imprisonment for two (2) years or both (Section 590(1)(c)). The same penalty applies should you conceal any debt due to or by the company. Should you fail to prepare and submit a Report on Company Activities and Property you are liable to penalty of $4,500 or imprisonment for six (6) months or both. A material omission in any statement or report relating to the affairs of the company will make you liable to a penalty of $18,000 or imprisonment for two (2) years or both (Section 590(1)(a)).
Section 590(1) provides for a penalty of to $18,000 or two (2) years imprisonment, or both if a person, being a past or present officer: (
a) Does not, so far as the person is capable of doing so, disclose to the appropriate officer all the property of the company, and how and to whom and for what consideration and when any part of the property of the company was disposed of within 10 years next before the relevant day, except such part as has been disposed of in the ordinary course of the business of the company; (c) has, within ten (10) years next before the relevant day or at a time on or after that day – i. fraudulently concealed or removed any part of the property of the company to the value of $100.00 or more; ii. concealed any debt due to or by the company; iii. fraudulently parted with, altered or made any omission in, or been privy to fraudulent parting with, altering or making an omission in, any book affecting or relating to affairs of the company;
by any false representation or other fraud, obtained on credit, for or on behalf of the company, any property that the company has not subsequently paid for; or v. fraudulently pawned, pledged or disposed of otherwise than in the ordinary course of the business of the company, property of the company that has been obtained on credit and has not been paid for;
(d) fraudulently makes any material omission in any statement or report relating to affairs of the company; (f) engaged in conduct that prevented the production to the appropriate officer of any book affecting or relating to the affairs of the company;
(g) has, within ten (10) years next before the relevant day or at a time on or after that day, attempted to account for any part of the property of the company by making entries in the books of the company showing fictitious transactions, losses or expanses; or (h) has, within ten (10) years next before the relevant day or at a time on or after that day, been guilty of any false representation or other fraud for the purpose of obtaining the consent of the creditors of the company or any of them to an agreement with reference to affairs of the company or to the winding up.
DATED this 26th day of July 2019
1. What is the Commencement Date of the Liquidation of Gold Coast Souvenirs Pty Ltd ?
2. Provide details of what Jessica Jones (as Liquidator of GC Souvenirs Pty Ltd) is required to do within 10 business days after the company meeting resolved to wind up GC Souvenirs Pty Ltd?
3. Where will Jessica Jones find the information to complete her obligations outlined in Question 2 above.
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