The directors are all of the view that if BF is liable to repay
the bank loan, then the company is unable to meet all of its debts
as and when they become due and payable.
(a)Â Â Â Is BF bound by the loan agreement and the mortgage contract signed by Olivia and Bob?
(40% of marks)
If more information would be required to provide a complete answer, state what that information is and why it would be relevant.
(b)Â Â Â If BF was liable to repay the loan, what should the directors do? Why? (20% of marks)
Grant Jackson holds 60% of BF's shares, while Bob Jackson, Olivia Jackson and Gerard Stone hold each 5% of BF's shares. Various persons associated with the Jackson family hold the remaining BF shares. Samantha Jackson (neÃ© Pollock), the first wife of Grant, but not the mother of Bob and Olivia, owns 3% of the shares and is rather disgruntled when she learns about the loan, the failed business expansion and the financial problems this all causes to BF. Fearing that the value of her shares is about to evaporate, Samantha is determined to get some money back from Grant and his children, who have amassed significant wealth over the last 30 years, while she â€“ apart from some dividend payments - has "missed out" after Grant had divorced her.
(c)Â Â Â Assuming BF was liable to repay the loan, what (if anything) can Samantha do based on the Corporations Act 2001 to get some more money from the Jackson family and their family accountant? (40% of marks)
In your answers be sure to cite specific legislation and/or cases in support of your statements, propositions and contentions. There may not necessarily be one â€˜right answerâ€™ - references to legislation or cases which support your reasoning will make your answer more persuasive and will also demonstrate your knowledge, understanding and ability to apply legal principles and concepts.
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