Stefan, Taichi, Siobhan and Felicia are directors of Hedonia Ships Ltd. Hedonia manufactures high-end yachts and is listed on the Australian Securities Exchange (ASX). Hedonias bank is Baddington Bank Ltd. Hedonia has borrowed $10 million from Baddington Bank on an unsecured basis, which it is required to pay back in full on 1 July 2022.

After the sudden loss of a large contract, Baddington Bank tells Hedonia that it will no longer extend credit to the company. Likewise, many of Hedonias suppliers become nervous and service the company only on a strict cash-on-delivery basis. The directors get numerous calls and emails from creditors wanting to know when the company will pay them back. The directors start to pay the more aggressive creditors while putting off others. Soon cheques start to bounce.

The stock market become very wary of Hedonias financial status and the share price drops sharply. In order to arrest the drop in the share price, on 1 May 2019 the directors decided to pay a dividend to shareholders. The dividend is actually paid on 4 May 2019. After paying the dividend, it becomes apparent the company has very little cash left to continue paying creditors.

Knowing that the company is doomed, on 10 May 2019, Taichi transfers the last $50,000 in Hedonias account to Baddington Bank, because he feels sorry that the bank loan cannot be repaid in full. He also transfers a Mercedes motor vehicle, which was owned by Hedonia, into his own name, because he believes the company owes him something for all his hard work.

By 20 August 2019, the directors have no alternative but to place Hedonia into voluntary administration, and the company subsequently goes into liquidation.

Advise the liquidator concerning her options to recover as much money for the creditors as possible.