JK Properties has other problems. JK has not submitted taxes and CPP contributions to the federal government totaling $150,000 for the past year. The TD Bank has a $3.2 million loan backed by a general security agreement on JK but JK has missed the past 3 loan payments totaling $90,000. There are 30 JK workers who make $1,000 per week who have not been paid for 5 weeks. Toronto Hydro is owed $10,000 and Dell Computers is owed $30,000 for computers it sold them and wants the money or the machines back. Some of these creditors have threatened to force JK into bankruptcy but JK is hoping to avoid this. Jim King the president and a director of JK, held an emergency meeting of the board of directors and it voted to pay its worried common shareholders a special dividend which cost the company $40,000. Jim's sister Gail is a dentist and an outside director of JK. She is worried if the company goes bankrupt that she could be responsible for some of JK's debts, but Jim told her not to worry. Discuss fully what would happen if JK's creditors try to force it into bankruptcy and what options JK has. Outline the steps and rights of all the parties. (10 marks).

Discuss FULLY the legal issues and the rights and remedies of all the parties.