Joe and Liz are the directors of BuzzMe Pty Ltd, a mobile phone company. Joe had...

 

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Joe and Liz are the directors of BuzzMe Pty Ltd, a mobile phone company. Joe had known that the company was in financial difficulties in December 2019 but had assured his fellow director it was just a temporary cashflow issue and that the company could trade out of its difficulties and pay all of its creditors by February 2020. However, it was unable to do so, and, by April, Liz became concerned about the number of "final demand" notices from suppliers and asked to see the actual accounts rather than continuing to rely on the assurances of Joe. It was only then that she realised that the company was insolvent. The company went into liquidation in May 2020, owing large sums of money to its creditors. (a) (b) Advise Liz and Joe whether there may have been a breach of s 588G of the Corporations Act. Assuming for the purposes of part (b) only, that there was a breach of s 5880, advise them of the remedies and penalties under the Corporations Act for the debts of the company. In particular, to what extent are they personally liable for those debts? Joe and Liz are the directors of BuzzMe Pty Ltd, a mobile phone company. Joe had known that the company was in financial difficulties in December 2019 but had assured his fellow director it was just a temporary cashflow issue and that the company could trade out of its difficulties and pay all of its creditors by February 2020. However, it was unable to do so, and, by April, Liz became concerned about the number of "final demand" notices from suppliers and asked to see the actual accounts rather than continuing to rely on the assurances of Joe. It was only then that she realised that the company was insolvent. The company went into liquidation in May 2020, owing large sums of money to its creditors. (a) (b) Advise Liz and Joe whether there may have been a breach of s 588G of the Corporations Act. Assuming for the purposes of part (b) only, that there was a breach of s 5880, advise them of the remedies and penalties under the Corporations Act for the debts of the company. In particular, to what extent are they personally liable for those debts?

Answer rating: 100% (QA)

There may have been a breach of s 588G of the Corporations Act if Joe had known th... View the full answer