Research on ASIC’s investigation about the continuation of trade by Queensland’s sunshine coast based national importer and distributor of whitegoods, also the operator of Kleenmaid brand of kitchen appliances, Kleenmaid Group, despite becoming insolvent from March 2008.
The Fact:
Three former directors of national whitegoods distributor Kleenmaid, Andrew Eric Young, Bradley Wendell Young and Gary Colleyer Armstrong were accused of 20 criminal charges including a $13 million fraud and insolvent trading, following an ASIC investigation. The trio were charged with 18 counts of criminal insolvent trading of debts totalling more than $4 million and a $13 million fraud committed on Westpac Bank (ASIC 2012).
Gary Armstrong and Andrew Eric
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(1A) For the purposes of this section, if a company takes action set out in column 2 of the following table, it incurs a debt at the time set out in column 3.
When debts are incurred | | | | Action of company | When debt is incurred | 1 | paying a dividend | when the dividend is paid or, if the company has a constitution that provides for the declaration of dividends, when the dividend is declared | 2 | making a reduction of share capital to which Division 1 of Part 2J.1 applies (other than a reduction that consists only of the cancellation of a share or shares for no consideration) | when the reduction takes effect | 3 | buying back shares (even if the consideration is not a sum certain in money) | when the buyback agreement is entered into | 4 | redeeming redeemable preference shares that are redeemable at its option | when the company exercises the option |
5 | issuing redeemable preference shares that are redeemable otherwise than at its option | when the shares are issued | 6 | financially assisting a person to acquire shares (or units of shares) in itself or a holding company | when the agreement to provide the assistance is entered into or, if there is no agreement, when the assistance is provided | 7 | entering into an uncommercial transaction (within the meaning of section 588FB) other than one that a court orders, or a prescribed agency directs, the company to enter into | when the transaction
As for the combination of cash and new shares, shareholders can take part of their money
* b. Further allocation of amounts allocated to repurchased shares to various components of stockholder equity upon formal or constructive retirement.
$30,000 of liabilities assumed by the corporation is $500 that relates to a personal expenditure. Under these
Section 3.2 Authority. The Seller has full corporate power, authority and legal right to execute and deliver, and to perform its obligations under this Agreement and to consummate the transactions contemplated hereunder, and has taken all necessary action to authorize the purchase hereunder on the terms and conditions of this Agreement and to authorize the execution, delivery and performance of this Agreement. This Agreement has been duly executed by the Seller and constitutes a legal, valid, and binding obligation of the Seller enforceable against Seller in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or other similar laws from time to time in effect, which affect the enforcement of creditors' rights in general and by general principles of equity regardless of whether such enforceability is considered in
Hampton decided to buy back their stock because they were confronting many dissident stockholders at the moment. Besides, the company had always maintained a conservative financial policy. Having to spend 3 million on the repurchase affected their cash balance, as well as their payable accounts, that in turn it increases creditors and suppliers claims against the company.
* All assumptions are identical as base case except for changes to equity and debt.
d. A parent exchanges its ownership interests or the net assets of a wholly owned subsidiary for additional shares issued by the parent’s less-than-wholly-owned subsidiary, thereby increasing the parent’s percentage of ownership in the less-than-wholly-owned subsidiary but leaving all of the existing noncontrolling interest outstanding.
Dividends should be made cumulative and issuable upon a liquidation event or an IPO. Such dividends may be converted, if the holder desires, to common shares. This will encourage management to seek a quicker exit.
4) The firm will pay the dividend to all shareholders of record on a specific date, set by the board, called the ________ date.
“The total equity investment (equity investments in a legal entity are interests that are required to be reported as equity in that entity’s financial statements) at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support provided by any parties, including equity holders.”
Obligations incurred from the year 2003 up to the present will be paid, on installment basis;
a) Profit Sharing: return of some company’s profit to employees in the form of cash bonus or retirement supplement.
The redemption available after the third anniversary of the original issue date is weighted towards equity. This option guarantees that the investors will receive at least the principal back. The mandatory redemption behaves like debt because there is a definite maturity date. The protective covenants are also weighted toward debt because the risk is limited and gives priority to the Series B Preferred Stockholders. Dividends are usually associated with equity; however, in this case the dividends are behaving more like debt interest payments. The dividends are paid at a fixed 8%
firm’s financing, for example, issuing or repurchasing stock and borrowing or repaying loans. It also
Dividends are subjected to higher tax rate compare to capital gain increased due to share buy-back. This discourages shareholders from desire to receive high dividends in place of higher capital gain as share values increase. A comparison is made below between the proposed capital structure and dividend policy.