Insolvent trading is illegal. In this case, if a director is caught insolvent trading, the liquidator may incur debts from the Directors if those debts are unpaid.
THE CONSEQUENCES OF INSOLVENT TRADING BRISBANE
There are consequences and penalties of Insolvent Trading. These Include:
If you are looking at some statutory defenses, please review The Corporations Act.
If creditors loose their compensation proceedings, it can be initiated by ASIC, a liquidator or a creditor against the director personally. This can be made in addition to Civil Penalties.
These proceedings can potentially be unlimited, which can lead to bankrupting the directors. Once this happens, the director can no longer direct or manage a company.
If you are caught trading insolvent, pecuniary penalties can incur up to $200,000. These penalties will be charged against the director(s).
If a director is found guilty of trading insolvent, they will be subject to criminal charges, which can lead up to $220,000 or imprisonment up to five years, as well as both. If you are facing Insolvency, Safeguard Insolvency will help!
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