Alpha Ltd has five wholly owned subsidiaries. Over 95% of the group’s net assets are held by Alpha Ltd. However, all of the group’s trading is done by the subsidiary companies. One of the subsidiaries, Beta Pty Ltd, owes a substantial amount of money to Wegg Ltd. Beta Pty Ltd was solvent before and after this debt was incurred. However, because of changed circumstances, Beta Pty Ltd is now unlikely to be able to discharge all of this debt out of its assets.
Beta Pty Ltd operates its business from premises it has leased on normal commercial terms from Alpha Ltd. Beta Pty Ltd has three directors only one of whom is also a director of Alpha Ltd. It has its own bank account and a commercial and administrative infrastructure typical for a company of its kind and size.
Wegg Ltd considers that Alpha Ltd has structured its corporate group to try to insulate Alpha Ltd from the liability risks inherent in the group’s trading activities.
Advise Wegg Ltd on whether it may be possible to make Alpha Ltd accountable for the amount owed to it by Beta Pty Ltd.