Chan, Jackie and Andy are directors Boats R Us Ltd (BRUL). BRUL manufactures tankers and is listed on the ASX. BRULs bank is Big Bank Ltd (BBL). BRUL borrowed $10,000,000 from BBL on an unsecured basis which it is required to pay back in full on July 1, 2019. After the loss of the large contract, BBL told BRUL that it would no longer extend credit to the company. Likewise, many of BBLs suppliers became nervous and placed the company on a strict COD (cash on delivery) basis. The directors started to get numerous calls from creditors wanting to know when the company would be paying them back. The directors started to pay the more aggressive creditors while putting off others. Soon cheques started to bounce. The stock market became very wary of BRULs financial status, and the share price dropped sharply. To ease the drop in the share price, on May 1, 2019, the directors decided to pay a dividend to shareholders. The dividend was paid on May 4, 2019. After paying the dividend, it became apparent the company had very little cash left to continue paying creditors. Knowing that the company was doomed, on May 10, 2019, Chan transferred the last $50,000 in the companys bank account to BBL as he felt sorry for BBL and thought it deserved something back. He also transferred a Mercedes motor vehicle which was owned by BRUL into his name on the basis that he thought the company owed him something for all his hard work in running the company. On August 20, 2019, the directors had no alternative but to place BRUL into voluntary administration and it was subsequently placed into liquidation.

Required: Advise the liquidator:

1. Whether the directors had the right to pay the dividend? (6 marks)

2. About any action that can be taken against the directors for breaches of section 588G? (4 marks)

3. Recovery of the Mercedes motor vehicle and the $50,000 under the voidable antecedent transactions (VAT) provisions? (5 marks)