CORPORATIONS ACT 2001

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)   [ Application]  

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.


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