This note considers the duty of a director to prevent a company from trading while insolvent, the circumstances in which a director will breach that duty, and when and how a liquidator or a creditor of the company in liquidation may bring an action against the director to recover compensation for loss caused to the company. It also considers the duty of a holding company to prevent a subsidiary from trading while insolvent, the circumstances in which the holding company will breach that duty, and when and how a liquidator of the company may bring an action against the holding company to recover compensation. It explains the nature and elements of each type of action and possible defences that may be available to a defendant to the action.