Question 1
Ben, Mary and Liang are the company directors in QuickCo Pty Ltd (QuickCo), having founded the company several years ago. Lately, QuickCo has been experiencing unusual cash flow problems and may not be able to pay all of it's creditors their full entitlements. This is the first time in the company's history that the business' cash flow has not been sufficient to cover all liabilities. The directors of QuickCo believe that the company's position will improve as they are currently negotiating several large contracts that would hopefully bring in sufficient cash flow to satisfy all present liabilities. Ben, Mary and Liang are concerned about their future job prospects if the company becomes insolvent.
CreditCo Pty Ltd (CreditCo) is a secured creditor of QuickCo with a 1st registered mortgage over QuickCo's office building (its most significant asset). CreditCo is concerned because QuickCo has not made its monthly loan repayments over the last 2 months. CreditCo is concerned about obtaining repayment of the debt, but does not want to pressure QuickCo as the company is its largest business customer. If QuickCo goes out of business, CreditCo will loose a substantial portion of its business. CreditCo is flexible about obtaining repayment of its debt.
Ezifinance Pty Ltd (Ezifinance) is an unsecured creditor of QuickCo who also has not been paid for the last 2 months and is concerned about the repayment of its debt by QuickCo. QuickCo is Ezifinance's smallest client and the CEO of Ezifinance would like to clear the debt off the company's books sooner rather than later.
Advise each of the following parties with reasons, and with reference to the relevant sections of the Corporations Act, as to which form of external administration would best suit their needs.
(a) Ben, Mary and Liang
(b) CreditCo; and
(c) Ezifinance
Your answer should also consider whether the party you are advising is able to initiate the form of external administration you are advocating.