1. Eddie, Ming and Hanh are the only shareholders and directors of Sparrow Pty Ltd, a trading company that supplies food

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1 Eddie Ming And Hanh Are The Only Shareholders And Directors Of Sparrow Pty Ltd A Trading Company That Supplies Food 1 (101.07 KiB) Viewed 42 times

1. Eddie, Ming and Hanh are the only shareholders and directors of Sparrow Pty Ltd, a trading company that supplies food products to cafés around Sydney. In recent times, Sparrow's cash flows have been pressured because a few large customers, including CafeNow (a large franchise coffee shop with hundreds of outlets), have been late in paying their invoices. This has meant that on a number of occasions Sparrow has not had sufficient funds to pay its bills. At the same time as the company's cash flow troubles, the employees write to the directors about an intention to take industrial action in an attempt to recover unpaid wages and entitlements. The cash flow problems are increased, when the company's bank, Bright Bank Ltd, contacts the directors about falling behind on their monthly repayments. The loan from Bright Bank Ltd is secured over all of Sparrow's equipment. In an attempt to ease the financial situation, Eddie on behalf of the company seeks out an unsecured loan from Quick Bucks Pty Ltd for $50,000 which is guaranteed by the directors of Sparrow Pty Ltd. Applied Company Law 79014 20 Question: From the above scenario first identify who are Sparrow Pty Ltd's main creditors? Next, advise each of the main creditors, with reasons, and with reference to the relevant sections of the Corporations Act 2001 (Cth), as to which form of external administration would best suit their needs. What assumptions of fact do you need to make in your answers? (i.e. what further information do you need)