Question 3
As a result of failed ventures, Sui Sui Pte Ltd was facing cashflow problems and unable to pay its debts when they became due and payable since 1 January 2019. A supplier applied to the court to wind up the company on 1 March 2019 and was granted the winding up order on 1 July 2019. A liquidator was appointed thereafter.
Upon investigation, the liquidator noted the following cases:
Case 1:
UBB Bank granted a loan which was secured by a floating charge created on 11 May 2015 over all of the company’s assets and undertaking. $100,000 of the loan remained unpaid.
Case 2:
DSS Finance offered a credit facility which was secured by a fixed charge created on 1 May 2016 over the factory. $500,000 of the loan remained outstanding.
Case 3:
OCC Bank extended the loan facilities secured by a floating charge created on over all of the company’s assets and undertaking of the company on 30 September 2016. $200,000 of the loan remained due and payable.
Case 4:
On 27 December 2018, Sui Sui Pte Ltd purchased a large order of inventory from Bagus Pte Ltd. In return, Sui Sui Pte Ltd granted Bagus Pte Ltd a floating charge over the inventory. Except for UBB Bank, all the charges were duly registered within 30 days of creation of the debts.
Case 5:
Sui Sui Pte Ltd settled an account totaling $80,000 due to Kia Pte Ltd, a trade supplier, on 15 February 2019, two weeks before the application to wind up was filed. Kia Pte Ltd and Sui Sui Pte Ltd have a common director.
(a) Explain how a supplier can apply to the court for a winding up order.
(b) Describe to the liquidator how he should treat the various claims in Cases 1-5 above.
(c) Explain to the liquidator how he should rank the creditors in Cases 1-5 in the
ranking of claims. You are not required to state the amount payable to each
creditor.
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