Bob, Brad and Mary are the only shareholders and directors of Coco Pty Ltd, a trading company that supplies food products to cafes around Canberra and New South Wales. In rent times, Coco's cash flows have been pressured because several large customers including Cafenow (a large franchise coffee shop with hundreds of outlets) have been late in paying their invoices. This has meant that on several occasions Coco has not had sufficient funds to pay its bills, particularly rent. The owner of its warehouse has written several letters warning that if Coco is late in paying its rent, it will be evicted from the premises.

At the same time as the company's cash flow troubles, the employees take industrial action in an attempt to receive a pay increase. This strike stops deliveries from the warehouse for two days, with several customers cancelling their supply contracts with Coco. The cash flow problems are increased when the company's bank, Eastbank Ltd, threatens to appoint a receiver over the company if it does not pay its monthly interest within two weeks.

Bob, Brad and Mary convene a board meeting to consider their options. Bob and Brad would like to negotiate with their creditors to restructure the company's debts. Mary, however, would like to sell out and change industries.

Advise Bob, Brad and Mary as to their options under the external administration procedures under the Corporations Act.