Pat and Lily are friends and decide to start up a retail nursery business. On advice from their accountant, they incorporate a proprietary company called LilyPat Pty Ltd. The nursery was very successful, and Lily commences serving refreshments in the nursery shop. Pat always resisted the idea of serving refreshments in the nursery because it was not part of their main business plan. He alleges that this refreshment service diverted resources away from the nursery. Lily argued that it enhanced the business by drawing more customers and that potentially the income from the refreshments would outstrip the nursery revenue. Gradually, their differences in opinion have grown, and their relationship has become very difficult. Decisions about the management of the business are difficult to achieve. A deadlock situation is continuing in the company.

You are the adviser of the company, and therefore, Pat and Lily have approached you for advice regarding the future of the company.

On the basis of the facts outlined here, you are REQUIRED to:

Suggest ways to keep the company running, if possible. If it is impossible for the company to continue to trade, then what are the options for closing down the company and how will that be done. Your answer should include references to relevant cases (if any) and appropriate provisions of the Corporations Act 2001 (Cth).

[10 marks]