Corporations Act 2001

CHAPTER 5 - EXTERNAL ADMINISTRATION  

PART 5.7B - RECOVERING PROPERTY OR COMPENSATION FOR THE BENEFIT OF CREDITORS OF INSOLVENT COMPANY  

Note: This Part applies to a sub-fund of a CCIV in a modified form: see Division 3 of Part 8B.6 (for provisions relating to Division 2B ), Division 5 of Part 8B.6 (for provisions relating to Divisions 2 and 2A ) and Division 6 of Part 8B.6 (for provisions relating to Divisions 3 , 4 , 5 and 6 ).

Division 4 - Director liable to compensate company  

Subdivision A - Proceedings against director  

SECTION 588M   RECOVERY OF COMPENSATION FOR LOSS RESULTING FROM INSOLVENT TRADING  

588M(1)    
This section applies where:

(a) a person (in this section called the director ) has contravened subsection 588G(2) or (3) in relation to the incurring of a debt by a company; and

(b) the person (in this section called the creditor ) to whom the debt is owed has suffered loss or damage in relation to the debt because of the company ' s insolvency; and

(c) the debt was wholly or partly unsecured when the loss or damage was suffered; and

(d) the company is being wound up;

whether or not:

(e) the director has been convicted of an offence in relation to the contravention; or

(f) a civil penalty order has been made against the director in relation to the contravention.

588M(1A)    

This section also applies if:

(a) a person (the director ) has contravened subsection 588GAB(1) or (2) or 588GAC(1) or (2) relating to disposition of property by a company; and

(b) one or more creditors of the company have suffered loss or damage because of the disposition and the company ' s insolvency; and

(c) the company is being wound up.

This section applies whether or not the director has been convicted of an offence relating to the contravention or a civil penalty order has been made against the director for the contravention.

588M(2)    
The company ' s liquidator may recover from the director, as a debt due to the company, an amount equal to the amount of the loss or damage.

588M(3)    
The creditor may, as provided in Subdivision B but not otherwise, recover from the director, as a debt due to the creditor, an amount equal to the amount of the loss or damage.

588M(4)    
Proceedings under this section may only be begun within 6 years after the beginning of the winding up.