THE CORPORATIONS LAW

CHAPTER 5 - EXTERNAL ADMINISTRATION

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

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)  [Director contravened subsec 588G(2) or (3)]  

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(2)  [Liquidator may recover from director]  

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)  [Creditor's power to recover]  

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)  [Time limit]  

Proceedings under this section may only be begun within 6 years after the beginning of the winding up.