Dennis and Noel Dube are first cousins. Dennis is an accountant and Noel is an architect, and in 1999 they formed a private company called Buildarama (Pvt) Limited. The company’s shares are fully issued and paid for, the shareholding structure is on an equal basis, and the two cousins are the sole directors of the company.Since the beginning of 2010, Buildarama (Pvt) Limited has allegedly owed an amount of $200 000·00 to Flame Lily Industries, a company that supplies a variety of building materials to the construction industry throughout the country.Not only is the figure of $200 000·00 disputed by Buildarama, but the company believes that it has a valid counter-claim for breach of contract against Flame Lily Industries as well. Flame Lily Industries have now issued a creditor’s petition for the winding up of Buildarama (Pvt) Ltd. On their creditor’s petition Flame Lily Industries are arguing that, in the alternative, the High Court can appoint a provisional judicial manager to run the affairs of Buildarama (Pvt) Limited.RequiredIn relation to insolvency proceedings, discuss:
(b) What Flame Lily Industries must establish for the court to appoint a provisional judicial manager. (3 marks)