Helen and Gerald incorporated Zion Ltd in 2008. Zion Ltd manufactures and sells wine barrels in Margaret River, Western Australia. The business had been successful until late 2013 when Helen and Gerald, the directors of the company, decided to expand the business to manufacture and sell wine barrels interstate. Zion Ltd had to move from the existing warehouse to a larger warehouse which in turn cost more in rent.

Despite repeated requests, Zion Ltd has not paid Bendu Ltd $40,000 owed for the last six months' rent on the premises. As a result of non-payment, the company could be wound up in insolvency.

NOTE: You are required to use the 4-steps process in answering this question. The marks allocated for the steps are as follows:

Steps 1 and 2: 8 Marks.

Steps 3 and 4: 7 Marks.