BLAW20001 Lecture Notes - Lecture 5: Board Of Directors, Civil Penalty, Unsecured Creditor
7 Sep 2018
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Duty to prevent insolvent trading: directors have a duty to prevent their company incurring debts when the company is insolvent or would become insolvent s 588g. Purpose of duty is to protect creditors. Who owes the duty: duty is owed by directors (as de ned under s 9) includes de facto & shadow directors s 588g. Standard chartered bank v antico: a company itself cannot be appointed director of another company, but a company can be shadow director of another company. Therefore a company can be subject to the duty under s 588g: duty owed by parent company to ensure their subsidiary does not trade while insolvent s 588v. Parent company can be sued by liquidator of subsidiary and be liable to pay their debts. Elements of insolvent trading duty: s 188g applies to impose liability on a person if: the person is a director when a company incurred a debt.
