XY Mine Pty Ltd has four directors: Archy, Bruce and two nominees of QLD Ltd, the company that owns the other 50% of the issued shares in XY Mines. In 2019, the mine operated by XY Mine was hit by severe flooding and ceased production for several months. The chief operating officer of XY Mine sent a report to its directors explaining that there were cash flow difficulties, that copper prices were dropping, and that the prospects of XY Mine raising further capital by borrowing or further equity injections, were limited. However, he confesses that he has not been keeping appropriate financial records. At a board meeting attended by Bruce and the two QLD nominees, the directors resolve to enter into an unsecured agreement with an Indian engineering firm to acquire a new drill. They believe the new drill will improve efficiency at the mine and return it to profitability. Archy is away on holidays and does not attend the meeting. Have the directors (or any of them) breached their statutory duty to prevent insolvent trading by XY Mine?

Answer rating: 100% (QA)

An Insolvent company is defined as one which is unable to meet its financial obligations as and when ... View the full answer