内容文稿说明duty to avoid insolvent trading

DutytoavoidInsolvent[Directorscontravenes588Giftheyfailtopreventtheircoyincurringdebtswhentherearereasonablegroundsforingthatitisinsolvent.S181:dutytoactinbestinterestofcreditorswhenthe isinsolventanddutynottoprejudicecreditors’interest.]Directorshavedutytopreventinsolventtrading;S588Gapplieswhenthefollowingconditionsaresatisfied:(4requirements)S588G(1)(a):MustbeadirectorwhencoyincurstheAPP:xxxxxx(directors)arethedirectorsin whenitincursthedebtwhich .xx(directors)didn’tactinthebestinterestofcreditorsandreduceCoyinsolventwhendebtwasS95ADefinitionofinsolvency:p488.A isinsolventifthe unabletopaydebtsastheyfalldue.(MetropolitanFireSystemsvMiller)p494S588A(1)(b)requiresproofthatthe wasinsolventatthetimethedebtwasincurredor einsolventbyincurringthatdebt.(ASICvPlymin,p488:14App: )hasseverefinancialproblemsatthemoment,especially目抄写indicators. wasincurredwhen was或PresumptionsofS588E(3)continuinginsolvency,beingwoundS588E(4)acoyfailstokeeporretainadequatefinancialReasonablegroundsforingS588G(1)(c):theremustbereasonablegroundsforinginsolvencyatthetimethedebtwasincurred.(WilliamsvScholz)p490App:Duetosuchseverefinancialproblemsabove,areasonabledirectorwouldhavehadgroundsforinginsolvencyin.(有时间列出P.488case里的5点)Sodirectorsmusthavereasonablegroundsforingxx()isinsolventwhenthedebtwasincurred.failuretopreventdebtbeingS588G(2)(a)requiresproofthatadirectorfailedtopreventtheincurringthedebt,evenifitwasincurintheordinarycourseofbusiness.(ASICVPlymin) directorstillwentaheadandincurredthedebteventhehasisinsolvent,sohefailedtopreventcoybeinsolvent.Issue2:Defences(any588H(2)itisdefenseifthedirectorcanprovethatheorshehadreasonablegroundstoexpectsolventatthattimeandwouldremainsolventevenifthedebtactuallyincurredatthattime.(MetropolitanFireSystems)coysolventS588H(3)thedirectordelegatethemonitoringofthecoy'sfinancialpositiontoothersandrelyonothers.(ASICvPlymin)themustbeacompetentandreliable,responsibleforprovidingadequateinformationtodirector;ASICvPlyminthedirector,basedontheinformation,expectedthatthecoywassolventandwouldremainsolvent(MetropolitanFireSystemsvMiller)p494S588H(4)adirectorwasabsentfrommanagementcozofillnessorothergoodreasonsatthetimewhendebtincurred(TourprintInternationalp493)S588H(5)directorprovesthattheytookallreasonablestepstopreventthecoyfromincurringthedebtwhichare“unequivocalaction”.(StatewideTabaccoServices)p4965.S588H(6)directorhasmakeuseofvoluntaryadministrationprovision.App:_A(director)andB(director)awarethehasbeeninsolventandtheyhavenoavailabledefencesunderS588G.casepossibleC(director)mayarguethathe/sheabsencefrommeeting,butadirectorcannothidebehindignorance.缺席会议C(director)mayarguethathe/sheisoptimism,butoptimismandhopecannotbeDirectorsisunderanobligationtodemandinformation.Then,itisnotreasonableif doesn’tobtaininformation.没有获取信息So,bothofthedirectorswouldbeliableunderIssue3:ConsequencespensationpayabletoliquidatoronbehalfofunsecuredS588G(3):CriminalS1317E:designatedcivilpenaltyS588J:ASICmayinitiatecivilpenaltycompensationApp:Theconductbythedirectorsinxx( )canleadtocivilandcriminalliabilityforthem,whocanalsoberequiredto allypayanylossesincurredbycreditorsresultingfromtheP502Issue:WhetherJohnandMarshahavebreacheddirectordutytopreventinsolventAdirectorisunderadutytopreventthe incurringdebtsifthereisareasonablegroundtothatitisinsolvent:S588G.Directorshavedutytopreventinsolventtrading;S588Gapplieswhenthefollowingconditionsaresatisfied:(4requirements)JohnandMarshaaredirectorsofKBwhenthedebtincurred.KBincurreddebtof$150,000voluntarily.Whendebtof$150,000wasincurred, isinsolvent:s588aDefinitionofinsolvencyunders95hasregardtothe ’sinabilitytopayitsdebtsasandwhenthey edueandpayable.WithreferencetothecaseofMetropolitanFireSystemsvMiller,KBisunabletopay,consideringthewhole’sresource.KBcannotpayoffdebtwhentheyfallduedespitenumerousThepresumptionofinsolventisalsoappliedinthecase.S588E(3)statesthataispresumedtobeinsolventifitcannotrepaydebtsfor12monthsperioditfailstokeeporretainadequatefinancialrecords.Thepresumptionmaynotbesuitableinthecaseasitdidnotstatehowlonghaveitbeenininsolvency.Therearereasonablegroundsforingthatthe isinsolvencyasJohnandMarshaareawareoffinancialproblems.Andlastly,JohnandMarshafailedtopreventdebtbeingincurred.Theypurchase$150,000worthofbuildingsoncreditbutnothinghasbeendonetopreventincurringdebts.Therefore,bothJohnandMarshabreacheddutytopreventinsolventtrading.However,theymayhavedefences.S588H(2)reasonablegroundsto toremainsolvent.Itimpossibleforthemtohavesuchexpectationastheyalreadyknowthattheisinsolventwhenthedebtincurred:ASICvPlymin.JohnandMarshaalsocannotrelyonS588H(3)whichstatesthatadirectorwhohasdelegatedthemonitoringofthe ’spositiontoanotheruponwhomthedirectorreliesmayhaveadefence:MFSvMiller.Inthecase,thereisnodelegation.MarshamayrelyonS588H(4)thatsheisabsencefrommanagementasshedoesnotconcernherselfwiththeday-to-daymanagementofKB.However,inthissituation,shemaybreacheddutyofcareanddiligence:TourpointInternationalvBottThereisnosteptopreventincurringdebt,theycannotrelyons588H(5)aswell:ByronvSouthStarGroupTherefore,neitherJohnnorMarshacanrelyonConsequenceofbreachings588Gmayresultincompensationpayabletoliquidator.Inthecase,JohnandMarshamaycompensatetheliquidator$150,000.Moreover,bothofthemmaygetcivilorcriminalpenaltiesunders1317E&Gand2-07q4b)CEObreachbutNEDTheCEOwhowouldhavemanagedthe ’sday-to-daybusinesswouldhaveedoftheinsolvency,thustheCEOwouldhavebreacheds.588Gbyallowing totradewhilebeinginsolvent.However,astheNEDswouldnothaveedthe tobeinsolventastheydidnotparticipateinthemanagementofthebusiness.ThustheNEDswouldnothavebreacheds.588Gasunders.189,theyhavereliedoninformationlikethemonthlyfinancialreportsthatwasprovidedbyacompetentandreliable liketheCFOonthe ’ssolvency.CEOcannotrelyonThedirectorshadnoreasonablegroundstoexpectth