Company law

In this exercise, we will apply the 5 step VA process discussed in the video recording to Agfaphoto, a company that was in VA. I will be asking questions at each step (see over page) to test your knowledge. Step 1:

Agfaphoto (Australia) Pty Ltd sells graphic systems, health care imaging and consumer imaging (e.g. mainly consumer photography - photos, digital photo frames, cameras).

Agfaphoto (Germany) is the sole shareholder of Agfaphoto (Australia).

There are three directors of the company There are no securities over any of Agfaphoto (Australia) Pty Ltd's assets.

There are insufficient financial records to determine the true financial position of Agfaphoto, although it appears that liabilities clearly exceed assets.

Steps 2-5

The administrators' investigations revealed that:

-It was not possible to sell the business

-The German holding company is in liquidation and will no longer supply imaging goods to Agfaphoto or provide any financial support ----There was a $10 million payment from Agfaphoto (Aus) to Agfaphoto (Ger) 6 months prior to administration. The reasons for this payment are not clear. The directors of Agfaphoto (Aus) approved the payment. -Realisable assets are $1.5 m, Preferential Creditors are $1.8m and Unsecured Creditors are $9.5 m (this includes $9.2 m debt to the German holding company and a small number of trade creditors) Employees as preferential creditors (50 employees)

Unsecured creditors (60 creditors) ($0.3 million)

Agfaphoto (Germany) ($9.2 million debt)

Questions

Step 1: Suppose you are a director of Agfaphoto (Aus). Are you going to appoint an administrator here? Why or why not?

Step 2: What powers under section 437A would you exercise as a result of your investigations as an administrator? Why would you exercise these powers?

Step 3: You are a creditor. Would you appoint a committee of creditors? Why? Would you replace the administrator at this stage? Why or why not?

Step 4: What goes with the notice of second creditors' meeting? What key information about AgfaPhoto will be in the Administrators report so that creditors can make an informed decision?

Step 4: You are the administrator. What are you going to recommend to the creditors?

Step 5: What will be the likely creditors' resolution at the meeting? How will each class of creditors vote?

Exercise 1 (Workshop Objective 2) In this exercise, we will apply the 5 step VA process discussed in the video recording to Agfaphoto, a company that was in VA. I will be asking questions at each step (see over page) to test your knowledge. Step 1 . Agfaphoto (Australia) Pty Ltd sells graphic systems, health care imaging and consumer imaging (e.g. mainly consumer photography - photos, digital photo frames, cameras). . Agfaphoto (Germany) is the sole shareholder of Agfaphoto (Australia). . There are three directors of the company . There are no securities over any of Agfaphoto (Australia) Pty Ltd's assets. . There are insufficient financial records to determine the true financial position of Agfaphoto, although it appears that liabilities clearly exceed assets. Steps 2-5 . The administrators' investigations revealed that: - It was not possible to sell the business - The German holding company is in liquidation and will no longer supply imaging goods to Agfaphoto or provide any financial support - There was a $10 million payment from Agfaphoto (Aus) to Agfaphoto (Ger) 6 months prior to administration. The reasons for this payment are not clear. The directors of Agfaphoto (Aus) approved the payment. - Realisable assets are $1.5 m, Preferential Creditors are $1.8m and Unsecured Creditors are $9.5 m (this includes $9.2 m debt to the German holding company and a small number of trade creditors) Employees as preferential creditors (50 employees) : Unsecured creditors (60 creditors) ($0.3 million) : Agfaphoto (Germany) ($9.2 million debt) Questions Step 1: Suppose you are a director of Agfaphoto (Aus). Are you going to appoint an administrator here? Why or why not? Step 2: What powers under section 437A would you exercise as a result of your investigations as an administrator? Why would you exercise these powers? Step 3: You are a creditor. Would you appoint a committee of creditors? Why? Would you replace the administrator at this stage? Why or why not? Step 4: What goes with the notice of second creditors' meeting? What key information about AgfaPhoto will be in the Administrators report so that creditors can make an informed decision? Step 4: You are the administrator. What are you going to recommend to the creditors? Step 5: What will be the likely creditors' resolution at the meeting? How will each class of creditors vote