Focal is having cash flow problems.Last week Focal sold land it owned to George Whale ("GW"), a director and shareholder of Focal. The book value of the land was 200,000. The board agreed to sell the land to GW for 120,000 for a quick sale.

The board of Focal have discovered that James Kear, a director who resigned six months ago has set up his own business competing with Focal and is obtaining business from Focal's customers

8. Do the directors of Focal face any potential liabilities if they continue to trade in the present circumstances?

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