Just needed an idea to deal with this case.
Karen, Bradley and Owen are old friends who decide to start a boutique winery company specialising in organic wines. They call the company Pure Nectar Pty Ltd. Owen is an accountant of some experience. Bradley is the managing director with long standing management experience. Karen is an oenologist (specialist in wine making) and is a non-executive director.
One year into their venture Pure Nectar Pty Ltd starts to experience cash flow problems. Bradley and Owen do not explain this to Karen but proceed to prepare the required financial statements and present them at the directors meeting. They recommend that the company borrow $300,000 from Maverick Bank. The company's financial position does not improve and Pure Nectar Pty Ltd begins to suffer losses.
Maverick Bank appoints a liquidator. The directors, Karen, Bradley and Owen, are concerned that they will be held responsible for the losses.
Will the directors be held responsible for the company's losses under the insolvent trading provisions of the Corporations Act? Are there any defenses available to any or all of the directors?