Question: Gino and Daniel both served on ABC Pty Ltds board of directors during the 2018/19 financial year. After noticing a significant drop in orders, Gino

Gino and Daniel both served on ABC Pty Ltd’s board of directors during the 2018/19 financial year. After noticing a significant drop in orders, Gino and Dan were heard talking about and sharing their concerns ‘that the company would be facing insolvency if sales don’t pick up..’

Gino: Concerned about breaching Director Duties, Gino met with Tim, the company’s CFO, around 20 June 2018 and expressed concerns about possible insolvent trading. Tim, responded ‘don’t worry Gino… we’ve got a safety net in place… we’ve been through a lot worse.. trust me, we will be okay’. Later that same day, Gino suffered a heart attack during a tennis game and was hospitalized for 3 months.

Daniel: Also concerned about breaching possible Director Duties, Daniel resigned as Company Director on 20 June 2018.

Later investigations reveal that the company became insolvent on the 28th June 2018 yet kept trading for a further 2 weeks before being reported to ASIC.

QUESTIONS

(a) Discuss whether Gino breached any Director Duties (Do not refer to possible defences)

(b) Discuss whether Dan breached any Director Duties (Do not refer to possible defences)

(d) Discuss whether Dan has a defence under CA s 588H.

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Ansa No given the circumstances of the case Gino did not breach his dutiesLooking at the sales trend ... View full answer

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