Is there a personal liability for insolvent trading?
The defences are usually:-
- that the company was not insolvent at the time (the claim does not exist); or
- the statutory defences under section 588H are available to them.
Directors' commonly argue "we could have lent it sufficient funds". But the courts simply respond - but you didn't!
To rely on the statutory defence "we relied on competent and reliable person' carries a very heavy burden of proof.
Another defence is "I had no involvement etc". In one case the director claimed that although he was at the business premises, he spent most of the day asleep. Response by the court - that is not enough, even if we did believe you.
Caution is always needed and advice from someone who knows.
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