Question 4:

In 2021anumberof eventsoccurred:

Acombinationoflabourshortages, material shortages, rising interest rates and material costs as well as fixed price contractsforbuildinghouses has meant that many construction companies have run out of cash.

The directors of Willoughby Constructions Pty Ltd are facing this dilemma. There is insufficient cash flow to meet the company's weekly payments to staff and creditors.

REQUIRED:

1. Advise the directors as to whether they should appoint an administrator, and theconsequences of this. Advise whether there are any other options open to aninsolventcompany.
2. If they continue to trade on will they breach s588G or do they have a defence?