Clients decided to sue for compensation

Reference no: EM133659218

Morris and Jordan are the shareholders and directors of AeroCraft Pty Ltd, a small aerospace parts manufacturing company. Several of the company's clients have expressed dissatisfaction with the quality of the aerospace components produced by AeroCraft. The parts manufactured were often found to be substandard and had led to operational issues for the clients. A few of AeroCraft's clients had even raised the possibility of taking legal action against the company, claiming that the components provided did not meet the expected quality standards and had defects.

Morris and Jordan were concerned that AeroCraft Pty Ltd might face legal challenges if the clients decided to sue for compensation. They feared that the company might not have adequate financial resources to cover the compensation if the clients prevailed in a lawsuit against AeroCraft Pty Ltd. Morris and Jordan believed that the best course of action would be for a new company to be created and continue their aerospace operations under a fresh entity. They named the new company AeroTech Solutions Pty Ltd and transferred all the assets from AeroCraft Pty Ltd to the new company. AeroCraft Pty Ltd remained registered but ceased its business activities and held no assets.

Advise AeroCraft Pty Ltd's customers if Morris, Jordan, and AeroTech Solutions Pty Ltd will be liable to pay compensation for the defective products produced and sold to them by AeroCraft Pty Ltd by referring to relevant statutory provisions and case laws.

Reference no: EM133659218

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