QUESTION 1 - (15 Marks)

Mira is director of a company that is selling flowers at Waterfront, Casuarina and Palmerston. The flower company has had three years of poor trading and is now unable to pay its debts when they fall due.Mira seeks your advice on the options available in the circumstances. She is concerned the company may be insolvent but is hopeful that the NT economy will improve, and her business will flourish soon.

REQUIRED:

a)Explain the options available to Mira if she suspects the company is insolvent. What would be the potential benefit to her if she appoints a Voluntary Administrator?

b)What sort of risks could Mira face if she borrows more money to help the company but then can't pay it back?