Question from company contracts

PART B (Question Three is compulsory for all students) Question Three (30 Marks) In 2013 Dalma took over her grandmother's company Shine Pty Ltd (Shine), which ran a small hair and beauty salon business in Sydney. She soon set about updating the business products and image. Within a few years, Shine grew into a much larger business that has 10 salons operating in various cities across Australia. Despite its aggressive expansion strategy and increased business, the operations of Shine did not yield the desired financial results. Its financial position further deteriorated with the spread of Covid-19. As a consequence of the expansion and the pandemic Shine has been running at a loss for the last few years. The company is financed by loans totalling $1million from West Bank. West Bank has circulating and non-circulating security interests over all the assets of Shine, as well as personal guarantees from Dalma (as the company's sole director) and her partner, secured by a mortgage over their family home. Dalma is concerned that she may not be able to keep Shine afloat. She is particularly worried about her personal exposure under the guarantees she and her partner have given, and about the welfare of the employees who have been very loyal to the company. Shine has been late in the payment of rent on its flagship salon in Sydney each month for the last five months, but has managed to find the necessary funds, usually at about the time the second threatening letter from the landlord has arrived. Its debt of $5,900 to Sparkling Pty Ltd (Sparkling), a local cleaning company however is overdue. Shine has received a statutory demand from Sparkling. The 21-day period for compliance with the demand expired yesterday. Advise Dalma about her options under the external administration procedures of the Corporations Act. In your advice, you need to outline the advantages and disadvantages each of the different types of procedures for her and the company employees in light of the current situation. You also need to provide a brief comment on what West Bank is likely to do in this situation. Please ignore the impact of the Australian Government's JobKeeper payments on Shine and its employees in your advice