Company losses several of its most important clients

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Reference no: EM13977093

Ayra operates a gift and clothing business as a sole proprietor. She decides to form a company to take over the business. She is the sole shareholder and sole director. Ayra sells her business to the company at an inflated price and lends the company Rs.250, 000 to meet the cost of the purchase. As security for the loan, Ayra arranges a mortgage over a house (from which the business operates), which she transferred to the company as part of the business sale. For the next three years, the business makes a reasonable profit, but in 2015 there is a significant downturn in the economy and the company losses several of its most important clients. By 2016 it is evident that the company needs to be wound up. The unsecured creditors' amount is Rs. 375,000. Ayra claims she is entitled to the Rs. 250,000.

Reference no: EM13977093

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