Question One

Three years ago Jack and Jill incorporated JJ Internet Pty Ltd to take advantage of the boom in electronic commerce. Their business was to set up home pages for businesses on the Internet. Jack was the computer expert and Jill the marketing guru.

Due to poor cash management, JJ Internet have been struggling to pay its debts. Yesterday the company received a statutory demand from an unsecured creditor, OfficeLinks, demanding payment of an outstanding debt of $3500 for office supplies purchased monthly over the last 6 months.

Jack and Jill approach their bookkeeper, a final year student and a university friend, who advised them to "quickly borrow" $50,000 from Comm Bank so that Jack and Jill could purchase a luxury motor vehicle. The vehicle was owned by the company and had recently been valued at $150,000.

Within a few weeks of the borrowing however, the company was unable to pay the interest to Comm Bank and placed the company into voluntary administration. Soon after, the company was wound up. The realised assets were enough to pay Comm Bank, but $80,000 owed to unsecured creditors, including OfficeLinks remained unsatisfied.

Required:

1. Describe the procedure that OfficeLinks must follow to correctly serve the statutory demand on JJ Internet Pty Ltd and what JJ Internet should do with the statutory demand. Does OfficeLinks gain priority over other unsecured creditors in a winding up given that they have issued the demand before winding up commenced? (3 marks)
2. Advise the unsecured creditors if they have a claim against Jack and Jill personally, including any defences or safe harbours that Jack and Jill may have (4 marks)
3. Describe the procedures under the CA relating to both voluntary administration and winding up in insolvency, including the powers of the liquidator (3 marks)

Question Two

Gemini is a sole trader who runs a small business importing handcrafted furniture from Indonesia for sale in Perth to local consumers. Due to the restrictions caused by COVID-19 however, the business is not able to import furniture and for 4 months, Gemini has run down the stock and now has an empty warehouse.

Gemini has several creditors who have been patient and understanding during the pandemic but are now demanding monies owed. This includes back payments of leasing fees on the warehouse ($6000) as well as utility bills totalling $2400 (electricity, phone, internet). Gemini owns a semi- trailer truck used to collect and deliver the furniture to clients but sold the truck for $45000 last week and has put that money into her superannuation fund as a voluntary contribution.

Advise Gemini and the creditors on any courses of action they can take (5 marks).

Question Three

Managed investment schemes are governed by Chapters 5C and 7 of the Corporations Act, which require:

a) some managed investment schemes to be registered (1 mark)

b) some managed investment schemes to be operated by licensed responsible entities (1 mark)

c) certain disclosure documents and Scheme documentation to be given to retail investors and/or lodged with ASIC (1 mark).

REQUIRED

Discuss each of the above.