COVID-19 and the suspension of insolvent trading laws: directors potentially still liable on other grounds | Practical Law

COVID-19 and the suspension of insolvent trading laws: directors potentially still liable on other grounds | Practical Law

The recent decision to suspend insolvent trading laws in the face of the 2019 novel coronavirus disease (COVID-19) crisis leaves open the possibility that, absent meeting the criteria for the statutory safe harbour defence, insolvent companies may temporarily continue to trade without exposing directors to insolvent trading liability. However, as this article explains, directors will need to take particular care to consider the interests of creditors in their decision-making if they are to avoid alternative claims for breaches of directors' duties in the event of a subsequent corporate insolvency.

COVID-19 and the suspension of insolvent trading laws: directors potentially still liable on other grounds

Published on 31 Mar 2020Australia
The recent decision to suspend insolvent trading laws in the face of the 2019 novel coronavirus disease (COVID-19) crisis leaves open the possibility that, absent meeting the criteria for the statutory safe harbour defence, insolvent companies may temporarily continue to trade without exposing directors to insolvent trading liability. However, as this article explains, directors will need to take particular care to consider the interests of creditors in their decision-making if they are to avoid alternative claims for breaches of directors' duties in the event of a subsequent corporate insolvency.