Consequences for directors of insolvent companies

14 Apr 17

If you are a director of a company,  please be aware:

If a director is found by a court to have contravened the law, by failing to prevent a debt being incurred where they are aware that there are grounds  for suspecting insolvency, the court may:

1.- Order that the director is personally liable to pay compensation to the company equal to the amount of the loss suffered as a result of the director failing to prevent the company from incurring debts while it was insolvent; and/or

2.- Order that the director pay a pecuniary penalty to the Commonwealth of up to $200,000 if the court finds that the director’s failure to prevent insolvent trading
     is serious or materially prejudices the interests of the company or the company’s ability to pay its creditors; and or

3.- Disqualify the director from managing a corporation for a period of time that it considers appropriate, and/or

4.- If the court considers that the director acted dishonestly,  it may order a penalty up to $360,000 (or $420,000 from July 1st, 2017); and/or

5.- That the director be imprisoned for up to five years.