Journal article

Insolvent Trading in Australia: A Study of Court Judgments from 2004 to 2017

Stacey Steele, Ian Ramsay

Insolvency Law Journal | LAWBOOK CO LTD | Published : 2019

Abstract

The duty imposed on company directors under Australian law to not have the company of which they are a director trade while it is insolvent is controversial. The recent introduction of a safe harbour for directors’ personal liability for breach of the duty to prevent insolvent trading highlights the ongoing controversy surrounding this duty. This article presents the findings from a study of judgments of courts which considered the duty to prevent insolvent trading from 2004 to 2017. Directors were found liable in 72% of the judgments but the success rate differed significantly depending on who was the plaintiff. In cases brought by liquidators, the plaintiff was successful in 84% of the cas..

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University of Melbourne Researchers