Laws and legislation introduced by Australian government is high significant that provides guidance to the individuals in which they need to take action. Section 588 FA and FB of Corporation Act 2001 clearly presents that liquidator can recover certain transactions which are made by the firm within specified time frame. Hence, voidable transactions are those that made within the period of liquidation commencement. This report is based on the case situation which will develop understanding about the sections related to voidable transaction and voluntary administration.
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Identifying the date of commencement in relation to the winding up of Lounge Lizards
Given case situation entails that one of the creditors of Lounge Lizards Pty Ltd such as Small Guys Pty Ltd has applied for winding up the business operations on 12 December, 2016. In accordance with the Companies Act (1965) date of winding up is the one which is ordered by the court. Hence, section 219 presents that date of compulsory winding up is highly influenced from the court’s order. The given case scenario clearly presents that on 14th February curt placed order for the liquidation of Lounge Lizard’s Pty Ltd. Hence, it can be concluded that data of commencing winding up business is 14th February 2017.
Assessing ‘relation back day’ and applies it to Lounge Lizards
Corporation Act 2001, section 513 defined relation back day as voidable transaction in which company enters during prescribed period prior to the commencement of liquidation. Hence, such period which is determined by the Act is called as ‘Relation back day (Insolvency under section 459a and the relation-back day, 2016).’ By considering the given case situation it can be said that application was filed by one of the creditors namely Small Guyz Pty Ltd on December 2017. In this, issue is that on 30th November 2016, furniture was sold by Lounge Lizards to Dodgy Brothers. On the other side, date on which order was placed by court is 14th February 2017. Hence, by considering all such aspects it can be presented that Relation Back Day not applies to Lounge Lizards. Moreover, such transaction was not made by Lounge Lizard within the prescribed time period.
Evaluating whether transaction is voidable or not
Case scenario entails that on 30th November 2016, furniture worth of Australian $100000 sold to Dodgy Brothers. Hence, by referring the section 292 of liquidation and 588 FB it can be presented that transaction is voidable when it was made within the two years prior to the liquidation. Further, if transaction made within the duration when application is for liquidation considered as voidable. In the current situation, transaction was made on 30th November, whereas application for the purpose of liquidation filed on December 2016. However, laws and legislation presents that unreasonable director related transaction are recognized as voidable transactions (Osborne, 2016). It is clearly mentioned in the case study that 60% shares held by Steve, director of Dodgy Brothers, is the husband of one of the directors of Lounge Lizard. Thus, by keeping such aspect in mind it can be articulated that transaction is voidable. Moreover, 5.7 (B) presents that payment which is related to director and the one who is near to the Director is recognized as voidable.
Purpose of the report
Purpose of the report prepared by DSG (Dick Smith Group), an Australian public company, is to furnish details to the creditors regarding the financial and non-financial aspects of business. Further, report will also provide deeper insight to creditors about the opinions of administrator that they can present in the second meeting.
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Identifying the date of second Creditors meeting
Second creditors meeting were held by DSG on Monday, 25 July 2016 at 11 am. Resolving all the issues related to future of entities is one of the main objectives behind conducting meeting in accordance with voluntary administration. Section 439A entails that meeting must be held organized before or within 5 business days at the end of convening period. Along with this, rules and regulations regarding this clearly present that information regarding the meeting must be published within 5 business days (Legg, Day and Emmerig, 2017). On the basis of 439 A notices regarding the meeting must be accompanied with administrator’s report. This section clearly exhibits that convening period is 20 days after the commencement of admin