Law of Business Organization for Pop Pte Ltd -myassignmenthelp

Question: Discuss about theLaw of Business Organization for Pop Pte Ltd. Answer: Brief Fact of the Case: In the given case the Pop Pte Ltd is a private limited company being registered office at Singapore and is involved n the business of retail furniture. Priscilla is the sole shareholder and the director of the company. Dod Pte Ltd is a private company who manufactures outdoor living room furnitures and is a major supplier of goods to Pop. Pop has a debt of S$ 30,000 to Dod for a 15 sets of outdoor furniture supplied to Pop on 1st of March 2017. On 1st August 2017 Dod filed an insolvency proceedings against Pop for the debt amount. The court passed a winding up and order and appointed a liquidator. Now the liquidator has collected all information relating to the assets and liabilities of Pops company. When a company gets dissolved by the order of the court it is known as winding up or liquidation. The process of liquidation involves the investigation into the affairs of the company, realization of the assets of the company, payment to be made to the creditors of the company and is any surplus is left after the payment made to all the creditors of the company then the surplus is to be distributed among the beneficiaries of the company. The process of liquidation is conducted by the court by appointing a private liquidator who has certain duties, responsibilities and liabilities in conducting the process (Wan, 2016). Various provisions of the law states the duties or responsibilities of the liquidator in discharging its duties. Therefore the functions of the liquidators are various and they shall abide by the rules and regulations of the legislation relating to the process of liquidation. The Singapore Bankruptcy Act deals in the insolvency procedure of an individual and shall be re ad with the insolvency provisions of the companies Act 2006 of Singapore. As per the provisions of the Bankruptcy Act of Singapore Secured creditors have the priority over all the claims of the creditors (Alexander, 2016). The general ranking of the creditors as per the type of debt they owes the liquidated company are as follows: The liquidators fees or expenses shall be the first priority after disposing the assets of the company. Creditors claim secured by fixed charges; Costs and expenses for the process of winding up of the company; Wages or salary other remuneration due to the employees; Taxes to be paid to the government; Claims secured by floating charge; Unsecured Creditors; If any surplus is left shall be distributed within the beneficiaries of the company (Hazarika, 2014). Therefore, as per the details provided in the fact of the case the liquidator will rank the claims as follows: Ocean Bank will receive the amount to the extent of fixed charges on machineries of the Pop Pte Ltd. S$ 15,000 incurred for the cost and expenses in the process of liquidation. S$20,000 unpaid wages of the employees and workers. Ocean bank will receive the amount to the extent of floating charges on the inventories stored in Pops Warehouse Dod Pte Ltd as an unsecured creditor of Pop Pte Ltd shall receive S$30,000 as unpaid debt by the Pop Pte Ltd (Chan, 2016). The liquidator has the power to challenge in case of any transaction which has been made by the company within five years before the date of application for the winding up of the company is made which an undervalue transaction and is the reason for the insolvency of the company. In such case where the company has sold any of its goods at an undervalue price, the director of the company shall be liable to pay such amount to the liquidator at the time of winding up of the company. Therefore, in this case the liquidator will recover such amount from the sole shareholder and the director of the company i.e from Priscilla the amount which the company may have received if the transaction in the month of May and June would have been made at a market value (Saba Rahman, 2016). In case of liquidation of a company, the director or directors of the company may be liable for certain offences made before the company has become insolvent or the transactions made by the directors has led to the insolvency of the company. Following are the transactions which can make a director liable under the Companies Act (Chan et al., 2014). Directors entering into transactions before liquidation: Where a company has either bought or sold any goods or services within two years before the application for liquidation has been made, the liquidator may recover any amount from the director of the company on the amount which has been over valued or undervalued (Steele, Wee Ramsay, 2016). This has been stated under Section 331(1) of the Companies Act. Section 340 of the Companies Act states that in case of breach of duty by the director of the company, the liquidator has the right to apply before the court against the director on the ground that the director has carried on the business of the company in a fraudulent manner and the director shall be liable for such acts (Wei, 2015). Section 341 of the Act also states that when the directors are in breach of its duties towards the company, the liquidator may apply before the court for the breaches conducted while acting as the director of the company and shall be liable for such acts. Directors have the duties to look into the fact that not to take any debt on behalf of the company when the financial position is such that it will not be able to repay such debts or else the director shall be liable for the offence. The directors shall be liable to under section 339(3) of the Companies Act for such act and shall be responsible to pay such debts from the personal account of the director under Section 340(2) of the Act. Therefore, as per the given case Priscilla has acted violating the provisions of the Act and will be liable for the acts. The transactions of May and June are contradicting the provisions of the Act and as such the director Priscilla is liable (Lund, 2014). Ocean Bank is a creditor of Pop Pte Ltd and has all the rights of the creditors over the company. Ocean bank shall get all rights as a creditor of the company during the insolvency procedure of the company. Ocean bank has two type credits one is fixed charge credit and another is floating charge credit. The Ocean Bank is a secured debtor and shall not have to prove that it has provided credit to the company. The bank shall not have to initiate its claim before the liquidator in case of disposing the assets and distributing the amount to the creditors. The bank as a secured debtor has the right to receive the full amount on the fixed charge credit before any other creditor is paid from the liquidated amount received by the liquidator after disposing the assets of the company (Chan, 2016). The bank shall also get the amount of credit given on floating charge basis. However, the bank shall receive such amount only after all other creditors of the company are paid off. Moreover, the bank as a secured creditor of the company shall not receive any interest after six months from the liquidation of the company is made and shall receive the dividends from the liquidator as announced by him from time to time after disposal of the assets of the company (Agarwal et al., 2016). A creditor who is secured and can establish themselves as a valid creditor of the company will receive the amount so credited with such amount of interest from the liquidator after the insolvency procedure is completed. A bank will be paid to the sum of fixed charge on the assets of the company and rest amount of the floating charge shall be paid as an in-secured creditor the company. Therefore, the bank have file a claim for the floating charges on the inventories of the company to the liquidator to get the amount given as credit to the company with such percentage on interest within the period as may be prescribed by the liquidator (Tay Chan, 2016). Thus, bank being a secured creditor is at a advantageous position and can recover the amount so credited to the company with such amount of interest. Reference: Alexander, K. H. (2016). Guidelines to new Chapter 15 forms.Insolvency Restructuring International,10(1). Wan, W. Y. (2016). 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