Rose, Albert, and Zachary are directors of JoSep Pty Limited (JoSep). JoSep is an oil servicing company with headquarters in New South Wales and offices in Melbourne and Brisbane. It provides services to BHP, Shell and other oil, mining, and dredging companies. JoSep recently secured a contract from BHP and is planning to engage the services of Lorraine Pty Ltd to deliver cements. The delivery contract between JoSep and Lorraine contain the following terms: That Lorraine Pty Ltd would deliver to JoSep 1.2 million bags of cement in 12 equal instalments That each bag of cement must be 50kg That payments are due upon each delivery That one bag of cement would cost $100 Excited about their newly secured contract with BHP, Rose, Albert and Zachary decide to treat themselves to a holiday in Vancouver and draw funds from the company account for the trip. They noted that due to the pandemic they had been stuck in Australia and had not taken a holiday for two years. This trip depleted the funds of the company to the extent that they were in the red. The hope was that once they return and the business with BHP commences, the funds would be replenished. Upon their return, Rose, Albert, and Zachary noticed that three of their recurring direct debts had bounced due to lack of funds in the company account. When Lorraine Pty Ltd called to finalise the contract with JoSep, the three directors held a meeting to decide whether to proceed. As they were about to begin the meeting, Albert receives a call that there is a medical emergency with his daughter, and he had to excuse himself from the meeting. Rose and Zachary deliberated and signed the contract. Lorraine makes 6 instalment deliveries (600,000 bags of cement) but receives no money from JoSep. It's been the same excuse after every delivery (we are waiting for BHP to pay us. Once we receive the payment, we would pay you immediately). Lorraine is frustrated with the nonpayment. In the meantime, JoSep has learnt that BHP is having issues with the community and would not be able to go ahead with the project. As per the terms of the contract between Josep and BHP, it means that the contract is terminated. The Directors of JoSep are worried that they are in serious trouble. To forge a way forward, they try to agree on the next steps, but are unable to agree on anything. Albert being a good friend to the CEO of Lorraine Pty Ltd unilaterally decides to sell one of the company's properties to Lorraine Pty Ltd. The property is valued at $1million and he sells it for $600,000. He reasons that if they are unable to pay Lorraine the money for the delivery, Lorraine should at least get some form of benefit from the company before it goes under. Lorraine and other creditors are frustrated with the non-payments from JoSep and have decided to bring an action against the directors for insolvent trading and would like the company to be wound up.

Please advise on the following

1. The likelihood of success in an insolvent trading action and whether any defences would avail any of the directors.

2. What type of winding up would be available against JoSep and what are the procedures for the identified type of winding up

3. Assume a liquidator has been appointed and is investigating the activities of the company with a view to recover monies or/and property for distribution to the creditors. Please advise the liquidator on what may be recoverable.

Please support your answers with relevant case law in NSW, Australia and statutory provisions where applicable and provide references.