For the past 20 months, Disney Music Limited ("Disney") has experienced financial difficulties and failed to pay several loans on time. In May 2019, Minnie made a $500,000 loan to the company secured by a fixed charge over the company's music instruments. The loan was repayable until May 2021, but Minnie forgot to register the charge with the Company Registry. In July 2019, the company created a floating charge over its book debts to secure a loan of $2 million with ABC Bank (due to pay by July 2021). The charge document stated that the charge would be crystallized if any subsequent charge was created over the book debts of the company. The business continued to struggle, and in May 2020, the company created another floating charge over the same book debts with Mickey for a $500,000 loan (due to pay by May 2021). Both charges were duly registered. In October 2020, the court ordered Disney to wind up. Pluto is appointed as the liquidator and discovers two disturbing facts: (i) in June 2020, Disney repaid Minnie's $500,000 loan to her; (ii) in addition to the money owed to ABC Bank and Mickey, Disney owes $200,000 in wages to its employees, and $2 million to unsecured creditors. Pluto estimates that the total remaining assets of Disney amount to $2.5 million, and his liquidation expenses amount to $100,000. Advise Pluto regarding: The irregularities, if any, that Disney might have engaged in based on the legal principles of Company Law.

1.In June 2020, Disney repaid Minnie's $500,000 loan to her. This is a

a. Fraudulent trading

b. Unfair preference

c. Invalid floating charge

d. Transaction at an undervalue

2.Mickey's floating charge may be treated as

a. Fraudulent trading

b. Unfair preference

c. Invalid floating charge

d. Transaction at an undervalue

3.Who may be regarded as "a person connected with a company"?

a. Director

b. Supplier

c. Customer

d. Director's wife

4.The duration for the connected person is

6 months

1 year

2 years

3 years

Submit