Sam Speed works as an accountant for Global Solutions Accounting. His area of specialisation is liquidation. One day the managing partner hands Sam a file with documentation that evidences a number of facts about a company called United Metal Millers Pty Ltd in relation to which Sam has been appointed as liquidator by the court. An examination of the company's accounts so far has revealed that the company became insolvent on 2 January 2019. After an application to court by one of its creditors, liquidation commenced on 2 April 2019, whereupon it ceased trading. During the period 2 January - 2 April the company accumulated trading debts of $ 1 million. Its total liabilities are $ 4 million and its assets $ 2 million. Its Chief Financial Officer, Jenna Jameson, is in possession of certain of the company's financial records. Assume that you are a member of Sam's team and that he has assigned part of the file to you. Citing statutory authority, advise Sam as to what he ought to do in light of the following documents found in the file: A copy of an email sent by Bob Fraudster, CEO of United Metal Millers to Jenna on 3 January in which he wrote: 'I note your advice regarding possible insolvency at this time, but I am confident that we can trade ourselves out of this.' A letter to the company from Commercial Insurance Ltd, with a $ 500 000 cheque made out to the company for it to satisfy a claim by Dave Spector  a visitor to the steel mill who was injured when a piece of machinery fell on him and who had sued the company. A contract of sale between the company and Alice Jones, who is Bob Fraudster's niece, dated 3 December 2018 under which Alice bought a car owned by the company for $ 15 000. At the time the book value of the car was $ 25 000. An email sent to Sam by Electrical Machine Maintenance Pty Ltd asking if Sam would renew for a six month period the contract it has with United Metal Millers to maintain the latter's blast furnaces. An email from Southern Energy Pty Ltd threatening to cut off power supply to the company's premises because of an unpaid electricity bill. An email from the company's fleet manager advising Sam that on 4 April the Sheriff removed a truck from the company's premises in execution of a $ 250 000 judgment that a creditor had obtained after successfully suing the company for money owing to him.

Answer rating: 100% (QA)

I can provide some general guidance on how Sam Speed as the appointed liquidator might consider the documents found in the file in light of insolvency ... View the full answer