Document ID: chunk:federal_register_of_legislation:C2004A04501:schedule:3:p93
Version: federal_register_of_legislation:C2004A04501
Segment Type: schedule
Provision Reference: sch 3 (pt 93/110)
Character Range: 387712–390370

or services when supplied to the company.

"(6) If, during the 6 months ending on the relation-back day, or after that day but on or before the day when the winding up began, a debt secured by the charge was discharged, out of the company's money or property, to the extent of a particular amount (in this subsection called the 'realised amount'), the liquidator may, by proceedings in a

court of competent jurisdiction, recover from the chargee, as a debt due to the company, the amount worked out in accordance with the formula:

Unsecured amount — Realisation costs

where:

'Unsecured amount' means so much of the realised amount as does not exceed so much of the debt as would, if the debt had not been so discharged, have been unsecured, as against the liquidator, because of subsection (2);

'Realisation costs' means so much (if any) of the costs and expenses of enforcing the charge as is attributable to realising the realised amount.

"Division 3—Director's duty to prevent insolvent trading

Director's duty to prevent insolvent trading by company

  "588G.(1) This section applies if:

     (a)     a person is a director of a company at the time when the company incurs a debt; and

     (b)     the company is insolvent at that time, or becomes insolvent by incurring that debt, or by incurring at that time debts including that debt; and

     (c)     at that time, there are reasonable grounds for suspecting that the company is insolvent, or would so become insolvent, as the case may be; and

  (d)     that time is at or after the commencement of this Part.

"(2) By failing to prevent the company from incurring the debt, the person contravenes this section if:

    (a)     the person is aware at that time that there are such grounds for so suspecting; or

    (b)     a reasonable person in a like position in a company in the company's circumstances would be so aware.

"(3) This section is a civil penalty provision as defined by section 1317DA, so Part 9.4B provides for civil and criminal consequences of contravening it, or of being involved in a contravention of it.

"(4) The provisions of Division 4 of this Part are additional to, and do not derogate from, Part 9.4B as it applies in relation to a contravention of this section.

Defences

"588H.(1) This section has effect for the purposes of proceedings for a contravention of section 588G in relation to the incurring of a debt (including proceedings under section 588M in relation to the incurring of the debt).

"(2) It is a defence if it is proved that, at the time when the debt was incurred, the person had reasonable grounds to expect, and did expect, that the