QUESTION 3B

Use IRAC format to answer the question if you can.

1. Issue: State the legal issue(s) to be discussed.
2. Rule: State the relevant statutes and case law.
3. Application: Apply the relevant rules to the facts that created the issue.
4. Conclusion: State the most likely conclusions using the logic of the application section

You are a graduate analyst working for a leading insolvency firm.

Mark, Travis and Matt are the directors of Blink Property Group Ltd ('BPG') -company that acts as a property management agencyon behalf of investment property owners. BPG'sregistered office is 1/82 Collins Street, Melbourne. BPG does own two beachside holiday houses on the Mornington Peninsula.BPG'smain business proposition, however, was to take care of online rental bookings, key drop, short term luggage storage, cleaning, and all other services for owners. The company decided only to take on short term rentals but provide a guaranteed return to investors.

In July 2019, PPG was struggling to pay its outgoings during an extended slump in rental income during the winter months. PPG arranged for extensions of time to pay a supplier of toiletry products and entered into a payment plan with the ATO for its taxes. By December 2019, PPG started receivingsolicitors'letters from some of its property owners demanding payment for unpaid rental income.

In February 2020, the directors decided to place the company into voluntary administration.A review of the company's financial statements reveal that:

• In July 2015, PPG took out a mortgage over one of its holiday houses with the Collins Street Bank.
• In July 2017, the directors were each paid $50,000 in bonuses following strong financial performance in the previous financial year.
• In November 2019, PPG paid $10,000 in full to a contractor for electrical works after hethreatened to take debt recovery action in the Magistrates' Court.
• In January 2020, PPG transferred its interest in one of its Mornington Peninsula properties to Box Car Pty Ltd (the sole director and shareholder of which is Travis) without payment-telling the State Revenue Office it was a corporate restructure and therefore exempt from stamp duty.
• In February 2020, PPG owed $67,000 in wages and superannuation to its employees. Your manager has asked you to answer the following questions based on the legal issues raised by the aboveto assist in drafting the administrator's report to creditors.

REQUIRED

b)If the company is liquidated, what is the order of payment to creditors?

You can refer to theCorporations ACT 2001 on the link below if need be.

http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/