Muscadet status
Before making any decision regarding the problem of the two companies, there are important factors that are worth looking into regarding Chabilis and Muscadet status. First, these two companies are wholly owned subsidiaries of Brandy plc which is a large public company “with a sound prosperous reputation. ” Second, these companies have very close connection with Brandy plc to the point that “all profits made by the subsidiaries have been paid directly to the parent company. ” Third, these two subsidiaries cannot make any decision by themselves as all the decision requires the approval of Brandy plc.
Finally, Brandy plc guarantees any overdrafts and liabilities such as covenant in leases. Given this relationship between these subsidiaries and their parent company, it appears that Chabilis and Muscadet have a strong backing from their parent company and that all its transactions were given approval by Brandy plc and were even guaranteed by the mother company. Furthermore, all their decisions have first to be approved by Brandy plc which means that they have no inherent power to decide or to inter into transaction unless it is duly approved by their parent company.
Thus, their standing credits outside Brandy must have been granted on account of Brandy plc. The problems faced by Chabilis and Muscadet were acute to the point that they were wound up as insolvent by their creditors. Central to the problem was the financial melt down of the companies amidst drop in the production of grapes primarily for making wine. This came as despite of poor harvest of grape in 2008 and 2009, their creditors continued to extend credit line in view of their close connection with Brandy that eventually resulted lead to bankruptcy.
Thus in the final analysis, Brandy plc were responsible with what happened to these two subsidiaries as they were directly involved in the two companies financial affairs as well as in running these companies. The fact that both companies could not decide anything without the approval of Brandy means that they are equally liable to the creditors of the two companies. Given this back ground, it would be unfair for the subsidiary companies to be liquidated without taking Brandy plc into the scene, unless they are the one that initiated the liquidation of the two companies.
If they did, it would really be unfair for the two companies to be liquidated with out Brandy taking their share in addressing the problem. I would therefore advice the liquidator to do the following processes; first, he should call a meeting with all the creditors involved and asked them a certain period of time, perhaps a month so he can come with a potential solution to the problem. Everyone knew that liquidating a company asset means bringing to its end the existence of that company, so it would be necessary to explore all options before opting for liquidation.
Finally, Brandy plc guarantees any overdrafts and liabilities such as covenant in leases. Given this relationship between these subsidiaries and their parent company, it appears that Chabilis and Muscadet have a strong backing from their parent company and that all its transactions were given approval by Brandy plc and were even guaranteed by the mother company. Furthermore, all their decisions have first to be approved by Brandy plc which means that they have no inherent power to decide or to inter into transaction unless it is duly approved by their parent company.
Thus, their standing credits outside Brandy must have been granted on account of Brandy plc. The problems faced by Chabilis and Muscadet were acute to the point that they were wound up as insolvent by their creditors. Central to the problem was the financial melt down of the companies amidst drop in the production of grapes primarily for making wine. This came as despite of poor harvest of grape in 2008 and 2009, their creditors continued to extend credit line in view of their close connection with Brandy that eventually resulted lead to bankruptcy.
Thus in the final analysis, Brandy plc were responsible with what happened to these two subsidiaries as they were directly involved in the two companies financial affairs as well as in running these companies. The fact that both companies could not decide anything without the approval of Brandy means that they are equally liable to the creditors of the two companies. Given this back ground, it would be unfair for the subsidiary companies to be liquidated without taking Brandy plc into the scene, unless they are the one that initiated the liquidation of the two companies.
If they did, it would really be unfair for the two companies to be liquidated with out Brandy taking their share in addressing the problem. I would therefore advice the liquidator to do the following processes; first, he should call a meeting with all the creditors involved and asked them a certain period of time, perhaps a month so he can come with a potential solution to the problem. Everyone knew that liquidating a company asset means bringing to its end the existence of that company, so it would be necessary to explore all options before opting for liquidation.
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