On 1 February 2022 the members of Loser Ltd passed a special resolution to wind up the company and appointed Trevor as liquidator. During his investigations Trevor  discovered that on 1 July 2021 the Board of Directors of Loser Ltd sold a major item of equipment ( a non-current asset) to a company called Sanguine Ltd. Immediately prior to the transfer on 1 July 2021, the company's accounts revealed current assets of $100,000 and accounts payable of $300,000.

The accounts payable included a PAYG tax bill of $120,000 from the ATO which was due for payment on 30 March 2021. Further, all non-current assets were subject to security interests under the PPSA. The major item of equipment was secured against a loan provided by Jenny, a director of Loser Ltd .Jenny was owed $1 million by Loser Ltd.  

Sanguine is a company in which all of the shares are owned by Jenny's  daughter, Diana who is also sole director of the company.  The equipment cost $3,000,000 in 2015. With Jenny's consent, Loser Ltd sold the equipment to Sanguine for $500,000 and Jenny was paid the proceeds. When questioned by Trevor, Jenny and Diana explained that the transaction ensured the equipment "remained in the family" and the business formerly conducted by Loser Ltd "could start over again" with Sanguine, which was "in everybody's best interests". Trevor obtained a registered valuers' appraisal, who values the equipment at $1,500,000 at the time of the sale. Can Trevor recover the equipment  under Part 5.7B of  Australian Corporations Act.