(PDF) Assignment on Business Laws

Running head: BUSINESS LAWS
Business Laws
Name of the student
Name of the university
Author note

1
BUSINESS LAWS
Answer 1
Issue
Is small Pty ltd has been subjected to problems related to insolvency as provided by the
Corporation Act
Does Ravi has the right to appoint a liquidator and what are the options which the law makes
available to the Administrator
Rule
Whether an organization operating in Australia has a problem related to insolvency or not can be
analyzed under the provisions of section 95A of the Act.
 It has been expressly stated by the section that a corporation is only regarded as solvent
when it is able to pay the debts as and when they have been incurred by it.
 Any organization which is not regarded as solvent is to be considered as insolvent1.
Under the provisos of section 435A the administrator has to carry out the duties which have
been imposed on it by taking into consideration the existence of the company as far as possible.
Only where the company is insolvent the administrator may seek for the winding up of the
company2.
According to the rules provided section 436E3 of the Act the administrator has to call a first
meeting with the company creditors followed by a second meeting
1 Corporation Act 2001 (Cth) s 95A
2 Corporation Act 2001 (Cth) s 435A
3 Corporation Act 2001 (Cth) s 436E

2
BUSINESS LAWS
Section 438A of the Act deals with rules regarding how an administrator may carryout its
functions. The financial position, business and property of the business has to be investigated
into by the administrator as soon as appointment has been carried out. It is up to him to lawfully
decide under this section that what actions should be taken in relation to the best interest of the
creditors. The administrator may indulge into deciding making a deed of company
arrangements, whether he should bring the process of administration to an end and whether he
should take a decision to wind up the company4.
Section 437A provides for a role of administrator and under this section the administrator will be
able to carry out any function which could be carry out by the company or its creditors5.
It has been provided under the rules of section 439A of the Act that when an administrator has
been appointed he must provide notice of appointment to the creditors and also within the
convening period convene meetings6.
Application
The scenario stipulates that the Ravi’s company Small Pty Ltd is not performing good business
recently and has incurred $210000 as debt. In this situation the company only has assets
available worth $95000. This evidently provides that of the rules of section 95A are applied it
will show that the company is insolvent. This is because the company is not been able to pay off
the debt as and when incurred by it. Thus there is an insolvency situation.
Ravi being a secured creditor under section 436C of the Act can appoint an administrator to the
company.
4 Corporation Act 2001 (Cth) s 438A
5 Corporation Act 2001 (Cth) s 467A
6 Corporation Act 2001 (Cth) s 439A