Nikki Is a hairdresser and owns two hairdressing salons in town. Nikki has been running the two
Question:
Nikki Is a hairdresser and owns two hairdressing salons in town. Nikki has been running the two salons for the past rew years and is thinking that it might be a good time to expand given that her customer base has grown beyond the capacity of the two salons. Nikki consults some of her closest family and friends who all suggest to Nikki that it might be a good idea to consider incorporation. WKki hires a lawyer to help her register a new company under the Corporations Act 2001. On the 20th August 2022, Nikki's Stylish Salon Ltd was registered as a corporation limited by shares with ASIC. Nikki was appointed managing director and issued 90/100 shares and the other 10 shares were issued to her partner, Glen. A debenture was also issued to Nikki for a cash loan. After three months of things going well, three of Nikki's best hairdressers decide to incorporate and start their own salon, Breakaway Girls Ltd. Nikki Is furious because all three of the stylist's contracts provided restraint clauses that prevented them from competing and taking customers from NiKKIS when they left. By March this year, Nikki's business was on the brink of insolvency since she had leased two more salons and all were performing very poorly. By April, the business was insolvent and NiKkI was forced into liquidation. One of NIKKIS major hair product suppliers, Etique, thinks that Nikki has no right to rely on the debenture and that their debt should be paid off first, as Nikki is basically the owner of the company.
a, Advise nikki whether Etique are correct
b, Advise Nikki whether the 3 stylist can claim that it was the company and not the stylists that attracted Nikki customer away?
Auditing A Practical Approach with Data Analytics
ISBN: 978-1119401742
1st edition
Authors: Raymond N. Johnson, Laura Davis Wiley, Robyn Moroney, Fiona Campbell, Jane Hamilton