Read the scenario and answer the questions below

George and Matt are the directors of The Great Aussie Barbecue Pty Ltd (GAB), a business that supplies barbecues and accessories to both small business owners and to home barbecue enthusiasts. George and Matt each own 500 shares in the company. George is the public face of the company. He was a finalist on MasterChef Australia in 2017 and is well known for his barbecue recipes. Each barbecue sold included one of George's recipe books. Matt has a business and accounting degree and looked after the company records.

Matt realised that the company was in dire financial difficulties in October 2021. At the beginning of the pandemic, many people bought barbecues so they could enjoy delicious meals cooked in their own backyards, however, eventually the number of new customers dwindled. Matt told George over coffee one morning that cash flow was a bit tight, but did not further elaborate. Matt seemed confident that this was a temporary issue as the government had indicated that by December 2021, the economy would fully re-open and he was sure business would pick up.

By March 2022, customer numbers did not pick up. George noticed a pile of "final demand" notices from suppliers on Matt's desk and asked to see the actual accounts rather than continuing to rely on Matt's assurances.

It was only then that George realised that the company was insolvent. The company went into liquidation in June 2022, owing large sums of money to its creditors.

Read each question carefully, each question contains alternative scenarios.

Question B1

Assume that in June 2022 the company goes into liquidation.

Explain whether Matt and George have breached s. 588G of the Corporations Act 2001 (Cth). Set out the consequences of such a breach, in particular consider personal liability of the directors for debts of the company. [10 marks]

Question B2

Assume that in March 2022, Matt reveals to George that the company was in fact in difficulties.

Matt and George consulted a professional adviser who recommended that they expand their business into providing ovens, and other home cooking equipment, as that sector of the economy seemed to be booming. Explain whether Matt and George be able to rely on the statutory protections contained in s. 588GA(1) of the Corporations Act 2001 (Cth) to protect them from debts incurred after March 2022? [10 marks]

Question B3

Assume that in May 2022, GAB was just starting to recover financially.

The stress of keeping the business a going concern has been too much for George. He has just received an offer from Channel ZX to host a celebrity cooking show three evenings per week and he leaps at the offer. George transfers his 500 shares in the company to his wife, Gloria who has recently retired from her teaching job.

Gloria approaches Matt about selling some of his shares in GAB to her eldest daughter, Bridget. Bridget has expressed a keen interest in owning shares and learning the ropes as a 'junior' director of GAB. Matt thinks this is a great idea, it will mean he can spend less time managing the company and more time with family. Matt transfers 250 shares to Bridget.

With their combined shareholding of 750 shares, Gloria and Bridget pass a resolution that requires the minority shareholder Matt, who now has 250 shares, to sell his shares to the majority for a nominal value. Matt is furious when he realises that he has been taken advantage of by Gloria.

Advise Matt as to whether he can petition for compulsory winding up of the company based on the 'just and equitable' ground contained in s. 461(1)(k) of the Corporations Act 2001 (Cth).