Facts: Build-A-Garage Pty Ltd (BaG) is a company properly incorporated in Australia under the Corporations Act 2001 (Cth). It supplies and arranges installation of standard and custom garages and sheds throughout south-east Queensland. Its assets include real estate and buildings, all fully mortgaged to 100% of their value, and a range of leased earthmoving and other equipment subject to fixed and floating charges. In addition, the company owns a Yamaha Wave Runner and trailer purchased in January 2014 for $36,000 and a 2010 Noosa Cat 4100 Motor Cruiser that it purchased new for $320,000. These last two items were bought for "corporate outings" at the express instructions of the Managing Director and Chairman, Bob Schwimmer, and paid for in cash.
At 30 June, 2014, BaG's Balance Sheet showed current assets of $180,000.00 and accounts payable of $410,000. Of the accounts payable, 70% of it was outstanding for more than 120 days. Work-in-Progress (WIP) will net BaG $78,000 over the next two months. On 15 May, 2014, BaG received a final notification from the ATO to the effect that BaG's 2012-13 tax assessment had been finalised after much negotiation and as a result, BaG holds a tax liability of $285,000, which is due for immediate payment.
On 1 May, 2014, Bob Schwimmer instructed his accounting staff to organise the sale of the Wave Runner to a private buyer for $5,000 noting to the head accountant Doug Doubtful that "we need the cash". The private buyer was his wife's brother Colin Crawle who lives with Bob and his wife. At the same time, Bob instructed that the motor cruiser be sold to Easydone Pty Ltd for $50,000. Easydone Pty Ltd is a company incorporated under the Corporations Act 2001 (Cth). Its single shareholder and Director, Brian Schwimmer, is Bob's brother and Easydone's sole purpose is to erect and install garages and sheds sold by BaG. Easydone employs Brian as a Project Manager and regularly employs Bob's children Steve and Daisy as casual on-site labourers. On 10 May, 2014, Easydone acquired a $50,000 loan from the ANZ Bank and purchased the motor cruiser. The funds were transferred to BaG who allocated the money to consolidated revenue.
Doug Doubtful had received a formal valuation on both the motor cruiser and wave runner for insurance purposes in March, 2014 that confirmed the market value of the cruiser at approximately $250,000 and the wave runner at $27,500. He then questioned the sale transaction values and Bob laughingly replied that the sale was the best way "to keep fishing with the boys" and that the "family who sailed together, stayed together". As a result, Doug Doubtful resigned from BaG. On 27 June, 2014, an unsecured creditor of BaG, Ode-Alott, successfully applied to have the company wound up in insolvency and Sam Selloff is appointed as provisional liquidator which is not challenged by BaG's other creditors.
Question:
1. Advise Sam Selloff whether the wave runner and motor cruiser can be recovered under Part 5.7B of the Corporations Act. Consider whether the transactions are insolvent, uncommercial, and/or voidable.
2. Advise Sam Selloff what defences Colin Crawle and Easydone might put forward to oppose Court orders issued pursuant to s588F-F CA.