Jump the Moon Pty Ltd (‘JTM’) operates a restaurant specialising in handmade cheeses. JTM has two directors, Ben and Amy. Ben is the Managing Director (‘the MD’) and is in charge of the day-to-day operations. Amy is the marketing manager and also manages the restaurant.

 

The restaurant took delivery of a round of cheese in December 2018 that was contaminated and unfortunately, fifty guests at the restaurant suffered severe food poisoning as a result of the contaminated cheese. Negative publicity ensued, and bookings for the restaurant fell. The Board met in early April 2019 to discuss the dire financial situation. They decided that what was needed to improve the business outlook was a refit of the restaurant.

 

On 12 April 2019 JTM stopped paying staff their wages due to the cash flow crisis. JTM also approached the Cheatem Bank (‘Cheatem’) on the same day, but Cheatem declined to lend any more money to JTM.

 

On 15 June 2019, JTM signed a contract for a marketing campaign for $20,000 with TopDog Pty Ltd (‘TopDog’). JTM delayed paying its invoice to its wine supplier, Vino Pty Ltd (‘Vino’) on 10 August 2019. However, when TopDog’s invoice arrived on 15 August 2019, Amy on behalf of the company paid it immediately as she did not want any negative publicity for JTM.

 

On 8 February 2020, JTM was unable to make the payment to Vino. On 28 March 2020, Vino served JTM with a Statutory Demand. On 4 April 2020, Vino applied to the court to wind up JTM, which was granted on 7 April 2020. The court appointed a liquidator, Ms Gimlet on 20 April 2020.

 

Ms Gimlet investigated JTM’s affairs and discovered the following further facts:

 

Assets		Liabilities
Kitchen Equipment	$70,000	Wages	$80,000
Wine in cellar	$240,000	Unpaid supplier Vino	$280,000
Cheese	$100,000	TopDog debt	$100,000
		Loan to Cheatem (secured)	$450,000

 

• On 17 April 2016, JTM gave Ben’s brother a company car that was worth $49,000. Ben’s brother did not pay anything for the car.
• On 8 December 2017, JTM bought a painting of a Gippsland farm from Amy for $100,000 that she had painted herself in her amateur art class.
• On 30 October 2018, JTM paid Vino $100,000 cash on delivery for wine (the supplier was no longer extending credit to JTM).
• On 24 December 2016, the directors paid themselves each a $5,000 bonus.
• On 7 June 2018, Ben bought a rare bottle of Grunge wine from JTM for his private use. He paid $100 but it was valued in the company’s financial accounts at $2,100.

Required:

You are assisting Ms Gimlet in winding up JTM. She wants you to advise her about all the above transactions and how much JTM’s creditors are likely to receive in final satisfaction of their debts. You must refer to relevant legislation and case law to support your answer.