Paper: Insolvent trading – risks and benefits for liquidators, creditors and ASIC
In brief: Partner Paul Nicols (view CV), lawyer Tim James and Principal, Sims Partners, Alan Topp, review the law surrounding insolvent trading.
Presented in Sydney on 18 February 2004 at the Corporate Insolvency & Restructuring Forum.
This paper outlines the law surrounding insolvent trading and seeks to highlight the risks and benefits for liquidators, creditors and ASIC. The central question of what is a debt and when is it incurred for insolvent trading purposes is also addressed.
Topics covered include:
- To which companies does s 588G apply?
- The elements and proof of insolvency
- To whom do the duties apply?
- What is a debt and when is one incurred?
- Failure to prevent the company incurring a debt – reasonable grounds to suspect and awareness
- Statutory defences
- Reasonable grounds to expect solvency defence
- Reasonable steps taken to prevent the incurring of the debt defence
- Reasonable reliance on a competent and reliable person defence
- Non-participation in management due to illness or other good
- Reason defence
- Holding company liability for the insolvent trading of its subsidiary
- Section 1318 and 1317S
- The liability that is imposed as a result of breaching the insolvent trading provisions
- Bringing proceedings
- Recent case law
- ASIC's National Insolvent Trading Program
For more, download the paper (as an adobe acrobat pdf - 396KB)
For further information, please contact:
- Paul NicolsPartner,
Sydney
Ph: +61 2 9230 4414
Paul.Nicols@aar.com.au
