Hamish Taylor took over his grandfather's business providing funerals for pets in the early 1990s and soon set about updating its products and image. He changed the name of the principal operating company from "Funerals for Pets" to "Dearly Departed Pets Pty Ltd" (DDP). Within a few years, DDP had 10 funeral parlours operated from various rented premises throughout Australia.

As the cost of living continues to rise, it has become much harder to persuade people to spend money on funerals for pets, so DDP has been running at a loss for the last few years. The company is financed by loans totalling $1million from North Bank. North Bank has circulating and non-circulating security interests over all the assets of DDP as well as personal guarantees from Hamish (as the company's sole director) and his wife, secured by a mortgage over their family home.

Hamish is concerned that he may not be able to keep things afloat. He is particularly worried about his personal exposure under the guarantees he and his wife have given, and about the welfare of his employees who have been very loyal during difficult times. DDP has been late in the payment of rent on its flagship parlour in Melbourne each month for the last seven months, but has managed to find the necessary funds, usually at about the time the second threatening letter has arrived. Its debt of $5,900 to the local community choir however is way overdue. DDP received a statutory demand from the Choir. The 21-day period for compliance with the demand expired yesterday.

Advise Hamish Taylor about his options under the external administration procedures under the Corporations Act, including the advantages and disadvantages each of the different types of procedures poses for him and the company employees. In your advice, also provide a brief comment about what North Bank is likely to do.