Garret runs a soil testing business. He decides to form a company to take over the business. He is the majority shareholder and one of the directors. Garret sells his business to the company at an inflated price and lends the company RM90,000 to help meet the purchase cost. As security for the loan, Garret arranges a loan over a vacant block of land, which he transferred to the company as part of the business sale.

In the first year of operation, the business makes a small profit, but by the end of 2019, it is clear that the business is going down. Garret becomes desperate and works even harder. Finally, while working late into the night, Garret badly injures his hand and needs micro-surgery. However, his efforts to keep the business afloat are in vain, and the company is forced into liquidation. On realisation of the assets, it is found that the company has approximately RM95,000 to go towards meeting creditors' claims of RM210,000:

(a) If Garret is the only secured creditor, will he get his RM90,000 back?

(12 marks)

(b) Can Garret claim workers' compensation?

.

(8 marks)