Question

Question 2 (Total 10 Marks) Corporation Act 2001 (Cth)

Gerry Bell and his wife Tina are directors of a company which trades as a small fishing retail business (G&T Bell Pty Ltd). Tina always said she wanted to marry Gerry because he was an accountant and she thought he had the financial knowledge that she did not possess. She trusted his business acumen. The business operates from a small shop near Darwin’s waterfront worth $300,000 which the company owns, although the bank holds a mortgage over the property in the sum of $275,000. The company also owns stock and fittings worth $15,000. Continued hot weather has badly affected business, but some of Gerry’s fishermen friends have told him the weather would soon get better for sure. Gerry trusts his fishermen friends for their local knowledge and accordingly takes out advertising costing the company $50,000. Tina goes along with this as she trusts Gerry’s judgement although she is nervous that suppliers are still owed $40,000 and have not enforced their debts as they too hope the weather will improve and that this will help business conditions. The heat only gets worse and customers drop off. The advertising company owed $50,000 is not paid when the debt fell due and applies to the court for a winding up order.

Is G&T Bell Pty Ltd insolvent? Will Gerry and Tina Bell be liable under s588G?

Answer 1

As g&t bell petty ltd has unable to pay dues on time and it have liabilities more than asset and it also unable to pay debt in future due to insufficient funds to advertisement company so G&T Bell Pty ltd is consider as insolvent and also it had been applied for winding up order so such company will consider as insolvent company..

Directors will liable for decision taken by them misappropriately and with intent to fraud to outsiders or owners and they can held personally liable for loss occurred to the company for decision taken by them..

However directors can not be held liable for action taken by them if it is taken in good faith and for the purpose of benefit of company as whole..

So in this case heery and Tina beel can not be held liable as they have taken decision in good faith and for the benefit of company as whole..