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Topic: 4th Estate Media Ltd operates a free-to-air television station in Australia (Channel 3) as well as a lifestyle Magazine aimed at the female 35-55 demographic (Woman of the World). The...

Topic:
4th Estate Media Ltd operates a free-to-air television station in Australia (Channel 3) as well as a lifestyle Magazine aimed at the female 35-55 demographic (Woman of the World).
The shareholding for the company consists of:
•    Biku Pty Ltd 19% - this company is an investment vehicle for wealthy entrepreneur, Mike Bickly.
•    Illya Pty Ltd 25% - this company is an investment vehicle for wealthy entrepreneur, Simon Stable.
•    Carey Pty Ltd 5% - this company is an investment vehicle for wealthy entrepreneur, Dirk Carey, a childhood friend of Simon Stable.
•    The rest of the shares are held by hundreds of individual shareholders, who in the main, hold the shares as part of their retirement savings.
4th Estate Media Ltd has been profitable since it was established in the early 1990s and purchased Channel 3.
Channel 3 is the ‘Youth’ network of Australian television and its ratings are highest when it broadcasts shows aimed at the 25-29 demographic. Sometimes its programs are risqué which causes controversy, but results in higher ratings.
The company’s banker is Large Bank Ltd. Current exposure is $250m.
There are only 5 directors on the Board of 4th Estate Media Ltd. They are Mike Bickly, Simon Stable, CEO Daisy Prim, Independent Chairman Flem Worsely and media specialist Caddy Isely, who has never been employed by 4th Estate Media Ltd.
Sometime in 2016, the Board made a disastrous decision to try and change its programming format. Viewers fled the network in droves. Advertising revenues fell sharply. A cost-cutting exercise was launched at Channel 3 and the magazine but the company started to lose money.
The Board discussed Mike and Simon injecting more money into the company until a new strategy could be put in place to rescue the company. They refused. The Board decided to put the company into voluntary administration and Mark Menthol and James Corporal were appointed administrators.
Questions:
1.    What is voluntary administration? What is the process for appointing a voluntary administrator?
2.    What is the process of voluntary administration?
3.    If you were the administrators, how would you go about putting together a DOCA proposal for this company?
4.    Sometimes, directors appoint a voluntary administration to avoid insolvent trading. What is insolvent trading and explain how a person can be held civilly or criminally liable for insolvent trading?
5.    What is the position of the Bank when an administrator is appointed?
6.    4th Estate Media Ltd is a listed public company. Does the composition of the Board conform to ASX corporate governance guidelines?
7.    Do the minority shareholders have any say during the voluntary administration process? Do you think this is fair? Why or why not?
An overall mark out of 20 will be provided based on the criteria. Separate marks are not allocated to each question.



Oct 07, 2017
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