Taichi, Siobhan and Felicia are directors of Hedonia Ships Ltd . Hedonia manufactures high - end yachts
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Taichi, Siobhan and Felicia are directors of Hedonia Ships Ltd Hedonia manufactures highend yachts and is listed on the Australian Securities Exchange ASX Hedonias bank is Baddington Bank Ltd Hedonia has borrowed $ million from Baddington Bank on an unsecured basis, which it is required to pay back in full on July
After the sudden loss of a large contract, Baddington Bank tells Hedonia that it will no longer extend credit to the company. Likewise, many of Hedonias suppliers become nervous and service the company only on a strict cashondelivery basis. The directors get numerous calls and emails from creditors wanting to know when the company will pay them back. The directors start to pay the more aggressive creditors while putting off others. Soon cheques start to bounce.
The stock market become very wary of Hedonias financial status and the share price drops sharply. In order to arrest the drop in the share price, on May the directors decided to pay a dividend to shareholders. The dividend is actually paid on May After paying the dividend, it becomes apparent the company has very little cash left to continue paying creditors.
Knowing that the company is doomed, on May Taichi transfers the last $ in Hedonias account to Baddington Bank, because he feels sorry that the bank loan cannot be repaid in full. He also transfers a Mercedes motor vehicle, which was owned by Hedonia, into his own name, because he believes the company owes him something for all his hard work.
By August the directors have no alternative but to place Hedonia into voluntary administration, and the company subsequently goes into liquidation.
a Can the liquidator commence an action against the directors for breaches of s G of the Corporations Act? Explain.
b Does the liquidator have the power under Part B Div of the Corporations Act to recover the Mercedes and the $ Taichi transferred away from the company?
c Did the directors have the right to pay the dividend in early May Explain.
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