TLAW 402 COMPANY LAW ASSIGNMENT QUESTION
Question 1 [10 Marks]
Bob, a sole trader, is the owner of a very successful business called ‘Bling Bling’ which specialises in custom made jewellery. Bob has insured the business with Luky Charm Ltd. against fire, theft and the like in the sum of $5,000,000.
Some five years later, Bob decided to conduct the business via a corporate structure. He incorporated a company called ‘Bling Bling Pty Ltd’ which is validly registered with ASIC.
Immediately thereafter, in January 2014, Bob enters into a sale contract with Bling Bling Pty Ltd which purchases the business from him. As consideration for the purchase price, the company issued the following to Bob:
?a substantial block of shares as fully paid; and
debentures for a further substantial sum secured by a charge (security) over all of the company’s assets.
After incorporation, Bob caused the company to take out workers compensation insurance policy with Safety Ltd.
A series of ‘bad luck’ accidents followed. In February 2014, burglars broke into the premises of ‘Bling Bling Pty Ltd’ and stole stock valued at $500,000. In March 2014, Bob fell from a ladder in the store while trying to retrieve some stock and injured his back. He has incurred substantial medical costs. As a result of the Global Financial Crisis, business has declined and Bling Bling Pty Ltd is now insolvent and under the care of the liquidator.
The liquidator has rejected Bob’s claim against Bling Bling Pty Ltd in relation to the enforcement of the charge (security). Safety Ltd, which has underwritten Bling Bling Pty Ltd’s worker compensation policy, has rejected Bob’s claim for payment of his medical bills. Lucky Charm Ltd has also refused the insurance claim of Bling Bling Pty Ltd to recover the value of the goods stolen.
Advise fully, with reference to legal authority, whether Bob can:
(a) enforce his charge [security interest] against Bling Bling Pty Ltd; [5 marks]
(b) enforce his claim against Safety Ltd for the payment of his medical bills. [5 marks]
Question 2 [20 Marks]
Chu, a sole trader, has a successful restaurant business in Sydney. He used the profits to buy himself an expensive home in Ashfield, a BMW car and an investment property in Hurstville. Chu wishes to expand his business. His income and his income tax is rising. Chu comes to you advice. Chu wants to know whether he should reconsider the type of business structure he has. Chu has $200,000 dollars for the new business and will need a further $300,000 to open the new yum-cha restaurant in Chatswood. Chu is currently single, but wishes to marry soon and would love to have children.
Advise Chu, with reference to the facts above, what type of business structure would best suit his needs. Your answer must offer full reasons for the advice. Your answer must also give full details on the formalities required to implement the advice given. Your answer can be structured in the form of an essay [with the use of headings and sub-headings highly recommend]
Paper#58945 | Written in 10-Jan-2016Price : $10