In March 2015, Erum and Bano incorporated a company (Shoes in the City Ltd) that

specialized in selling ladies' footwear. Erum and Bano were the company's only members and

each owned 100 1 shares. Erum and Bano were the company's only directors.

The company began to experience financial difficulties. In September 2018, the company's

overdraft with the Green Bank pvt had reached its limit of 250,000. In return for increasing

the overdraft limit to 300,000,the Green Bank pvt demanded security and took a floating

charge over all the company's assets. The business continued to struggle and, in January 2019,

Erum and Bano were informed by the company's auditor that insolvent liquidation was

inevitable, although Erum and Bano disagreed and held out hope that the company's financial

prospects would improve. Erum and Bano decided to try and trade their way out of their

financial difficulties by having a sale. Unfortunately, the sale failed to increase business and in

March 2019, Shoes in the City was wound up. By this time, the company's overdraft with

Green Bank amounted to 290,000.

Allah Bakhsh has been appointed liquidator and has discovered several disturbing facts: (i) in

August 2018, Erum and Bano caused the company to repay an unsecured loan of 5,000, which

Bano had made to the company some months before; (ii) in addition to the money owed to

Green Bank, the company owes 10,000 to the Inland Revenue, 30,000 to employees in

wages, and 100,000 to unsecured creditors. Bakhsh estimates that the total remaining assets

of Shoes in the City amount to 150,000. Bakhsh's expenses in acting as liquidator amount to

3,000. Advise Bakhsh.