Please do as soon as possible

Hopwood Ltd owned and operated a shopping center in Sydney. Peter, John and Marks were the only directors of Hopwood. Peter was appointed the managing director due to his extensive knowledge of operating shopping centers. Both John and Mark are executive directors. Hopwood has a number of unrelated shareholders. Over the past few years, Hopwoods financial position has steadily deteriorated. While Peter was aware of this, he did not pass any financial information onto the other directors. Indeed, he repeatedly told them that the company was performing wonderfully. While John and Mark were given the companys financial reports, they never looked at them closely as they assumed that the auditors or Peter would alert them to any problems. By January 2021, things had started to get dire for Hopwood as attendance at its shopping center dropped precipitously due to a competitor opening a new shopping center nearby. Hopwoods cash reserves were running low and Peter was post-dating cheques in order to avoid running out of money. In a few instances, cheques were presented when Hopwood had insufficient funds and they bounced. On January 20, 2021, the manager of Hopwoods bank Dud Bank Ltd - called Peter and said that she would be forced to suspend the companys overdraft facilities unless the company improved its financial position. At a board meeting on February 1, 2021, Peter informed the board that he had a revolutionary idea for Hopwood. He proposed that Hopwood enter into leases for two more shopping centers that were located in Lennox Head. He suggested that by undertaking this transaction, revenue would increase and it would even make the company a potential takeover target. John and Mark were intrigued and told Peter to do whatever he had to do to get the transaction done. After the meeting, Peter approached a commercial leasing agent who informed Peter he had two shopping centers available for lease. The agent said the shopping centers were in wonderful condition and would be just what Hopwood needed. Peter inspected the shopping centers with his friend Frank who is an accredited residential building inspector. Peter thought the shopping centers were acceptable and Frank said he couldnt see any structural problems with the shopping centers. On March 1, 2021, the board had a further meeting and Peter updated the board regarding the leases. Peter told the board that Hopwood needed $3 million to place signage on the new shopping centers. Peter said he had reached an agreement with Dud Bank whereby it would loan the company $1.8 million and suggested Fred and Barney each contribute $500,000 in return for shares in Hopwood. John and Mark agreed. On March 5, 2021, the leases were signed, John and Mark transferred $600,000 to the company and a credit agreement was entered into with Dud Bank for $1.8 million. The new signage was completed on March 10, 2021 and Peter arranged a grand opening scheduled for April 15, 2021. On May 13, 2021, Peter received a letter from the Willoughby Shire Council saying that Hopwood was not permitted to open the two new shopping centers as they did not have adequate fire exits and the fire sprinkler system needed to be replaced. After some preliminary investigations, Peter discovered that it would cost over $600,000 to install additional fire exits and upgrade the sprinkler system. Knowing that the company was doomed, Peter transferred its last $20,000 in the companys bank account to Dud Bank because he felt sorry for Dud Bank and thought it deserved something back. He also transferred a Bentley motor vehicle which was owned by Hopwood into his name on the basis that he thought the company owed him something for all his hard work in connection with leasing the two new shopping centers. On June 20, 2021, the directors had no alternative but to place Hopwood into voluntary administration and it was subsequently placed into liquidation. The liquidator now desires to commence an action against the directors:

alleging the directors for breaches of their duty of care, skill and diligence. Discuss

alleging the directors for insolvent trading. Advise

the liquidator also desires to recover the Bentley motor vehicle and the $20,000 under Part 5.7B Div 2 of the Corporations Act. Advise

Will Dud Bank be able to appoint a receiver to recover the $ 1.8 million owing by Hopwood?

What are Hopwoods options given it is now under voluntary administration? Discuss