Question 1:

a)Discuss whether the case of Trevor Ivory Ltd v Anderson [1991] 2 NZLR 517 is consistent with general principles of tort liability applicable to companies.

b)Discuss what kinds of criminal laws do not apply to companies, and explain why they do not apply?

c)The managing director of Marduk Industries Ltd retained certain cash sales and did not disclose them on the tax returns of Marduk Industries Ltd filed with the Commissioner of Inland Revenue.

Required:

Explain whether Marduk Industries Ltd could be criminally convicted of 'wilfully or negligently making false tax returns' giving legal reasons. In your answer, you should refer to any relevant statutory provision and case law of which you are aware.

Question 2:

The law provides a variety of processes able to be applied to a situation in which a company is unable to pay its debts other than the appointment of a liquidator of the company.

Required:

Referring to relevant sections of the Companies Act 1993 (and other legislation you think relevant), describe in general terms the different ways of responding to corporate insolvency other than liquidation and when those processes might be appropriate.

Question 3:

The decision by a company to obtain capital funding usually involves a choice between debt funding and equity funding.

Required:

Explain, in general terms, the distinctions between debt funding and equity funding, and briefly explain why debt funding might be more advantageous for a company than equity funding.

Question 4:

In general terms, describe the different ways in which insolvent companies can be administered under New Zealand law (other than internally by the board of directors of the company) and under what conditions.

Question 5:

Nelson Plumbing Ltd (NEL) is an unsecured creditor of Richmond Lumber Ltd (RLL). NEL is owed $100,000 by RLL, and this amount has been outstanding for 18 months. NEL has contacted RLL on numerous occasions without satisfaction, and has also discovered that other suppliers of goods and services report that RLL has not been paying its debts.

Required:

a)Explain to NEL why it cannot appoint a receiver of RLL.

b)Explain to NEL the grounds upon which it can apply to the Court for a liquidator to be appointed for RLL.

c)Assuming NEL is successful and the Court appoints a liquidator, explain to NEL how a liquidator decides the order of priority for payment of the various claims or debts against RLL and where RLL's debt will fall in that order, referring to the relevant provisions of the Companies Act 1993 in your answer.