Case Study of Corporate Law

2096 words 9 pages
(Case- study ) | May 30
2013 |

Commercial applications of company law

CONTENTS

1. INTRODUCTION ................................................................................ 2

2. ISSUES ………………………….................................................... 2 3. ARGUMENTS OF THE DIRECTORS FOR THEIR DEFENCE.................... 2, 3

4. ARGUMENTS PUT BY ASIC AND THE COMPANY............................ 3,4

5. BREACH OF
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Also consider consequences where director is liable for insolvent trading and some of the orders that can be made under Sections 588J-588Q and Section1317E.

Arguments put by ASIC and the company

1) The first issue to deal with is the liability of directors for payment of the interest on the loans to friendly Bank Ltd. The courts will first decide whether or not the directors of the company have engaged in insolvent trading and breached s588G. ASIC can argued against all the directors under section 588G, which implies upon a person if (a) A person is a director of a company at that time when the company incurs a debt, (b) The company is insolvent at that time or becomes insolvent by incurring that debt, (c) At that time, there are reasonable grounds for suspecting that the company is insolvent, or would so become insolvent, as the case may be; (d) The director is aware at the time the debt is incurred that there are reasonable grounds for suspecting the company is insolvent or a reasonable person in a similar position in the company s circumstances would be aware.”(Hanrahan, et.al. 2013)

Company insolvency means according to section 95 A (1) defines solvency as being able to pay debts as and when they fall due. Section 95 A (2) defines insolvency as not being solvent. In this situation it is highly likely

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