Question

Simon and Peter own a business, Lumi-Flame Ltd (LF Ltd), selling glow-in-the-dark candles. They each own 50% shares in the company. They borrow £750 from Gerry and agree to pay him back in a month. The month goes by and Gerry still has not been paid.

Simon is concerned about this and wants to liquidate the company but Peter refuses. Gerry doesn’t have anything against LF Ltd but does want his money back.

Advise the parties on the status of LF Ltd, and its ability to continue trading.

Answer 1

Answer-

Simon and Peter own a business, Lumi-Flame Ltd (LF Ltd) and each own 50 % in it.

As Simon and Peter borrow £750 from Gerry and they have to return it in a month which they gail to return.

There is no need to liquidate the shares and pay back Gerry £750. They can both equally contribure £750 worth of shares as gift to Gerry so that he can benefit itf the share prices rise.

Gifting stock from an existing brokerage accounts of Siimon and Peter involves an electronic transfer of the shares to Gerry's brokerage account.

This method of transfer can eliminate the liquidation process of the Lumi-Flame Ltd (LF Ltd) shares and they can continue trading.

This method can benifit Gerry if the share prices rise and keep the company running.