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CORPORATIONS ACT 2001 - SECT 588M

Recovery of compensation for loss resulting from insolvent trading

  (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.

  (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.

  (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.

  (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.

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


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