Insolvent Trading & Director’s Role

Simon Cathro

Insolvent trading is the law under the Corporations Act section 588G that says that if a company is insolvent and a director allows the company to incur a new debt, then the director can be made personally liable for the new debts incurred. The law makes directors responsible for ensuring that their company does not trade while insolvent.

Insolvent trading is the law under the Corporations Act section 588G that says that if a company is insolvent and a director allows the company to incur a new debt, then the director can be made personally liable for the new debts incurred. The law makes directors responsible for ensuring that their company does not trade while insolvent.

This video outlines the roles and responsibilities of a Company Director while company goes insolvent.

In this video, you will discover the following key points:

Avoid trading whilst insolvent.
What are the powers given to liquidators under the section 588 G of Corporations Act?
A Director may access protection from the consequences of insolvent trading.
A Director has a defence against insolvent trading claims as per Section 588H of the Act.
A Defence will apply to protect a Director from personal liability in an insolvent trading claim.
Safe Harbour option for Directors and its requirements.
Involving a Safe Harbour advisor.

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