Substantial secured creditor of ken ltd

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Reference no: EM133282694

Ken Ltd manufactures vinyl dolls. 35% of the issued voting shares in Ken Ltd are held by Barbie plc. a listed company that heads a group of companies operating a very successful toy manufacturing and distribution business. The remaining shares are owned by the directors of Ken Ltd. By an agreement with the other shareholders, Barbie Plc has the right to appoint a majority of the directors of Ken Ltd.

Midge Limited enters into an agreement with Ken Ltd to supply the company with vinyl sheeting for use in the manufacture of the dolls. Midge Ltd has not dealt with Ken Ltd. before but is aware from Ken Ltd's Letterheads that it is a part of the Barbie Group of Companies. Midge Ltd is keen to develop business relations with Barbie plc and, accordingly, the Board of directors agrees to supply the vinyl to Ken Ltd at an introductory price which represents a loss to Midge Ltd.

Over a period of 6 months 6 deliveries of the vinyl material are made but no payment is received. It then emerges that Ken Ltd ceased trading about 5 months ago, and all the deliveries of vinyl were passed to another company, Shrimp Ltd. Shrimp Ltd was incorporated recently and is a wholly owned subsidiary of Barbie plc. Midge Ltd's inquiries also reveal that Ken Ltd has few assets, and that Barbie plc is a substantial secured creditor of Ken Ltd.

Reference no: EM133282694

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