Actions of Liquidator and ASIC in Business Law Cases

Running Head: BUSINESS LAW
Business Law
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1BUSINESS LAW
PART 1
Issue
The issue which has been identified in relation to the case study of Bruce and Less is that where
the court has ordered liquidation of the company what actions can the liquidator take against
them and the prospects of her being successful
Rule
In relation to a winding up situation which has been ordered by the court there are specific rights
which have been provided trough the Corporation Act 2001(Cth) to the liquidator of the
company (Ciro & Symes 2013).
Powers of a liquidator has been provided through section 477 of the Act. it has been provided
through the provisions of section 477(2) of the Act that a liquidator has the power of brining a
legal claim on behalf of the company.
It has been provided through the provisions of section 533 of the Act that in case the liquidator of
an organization identify during the winding up of a company that a present or past director or
officer of the company may have been guilty of an offence under a commonwealth law or the
law of any state and territory, or any person which had indulged in the management,
administration, formation and winding up of the company may have misused or retained the
property of a company or may have been negligent or would have committed a breach of duty or
trust towards the company and the company has become unable to pay off its debts, it is the duty

2BUSINESS LAW
of the liquidator make an application under section 597or provide such information to the ASIC
(Fitzpatrick et al., 2017).
In addition where the liquidator thinks fit he or she may further a report with the ASIC which
would specify any matter which he thinks is to be notified to the ASIC. Where the court
identifies in the relation to winding up of a company that a present or past director or officer of
the company may have been guilty of an offence under a commonwealth law or the law of any
state and territory as stated by the liquidator and any person which had indulged in the
management have misused or retained the property of a company or may have been negligent or
would have committed a breach of duty or trust towards the company the court may direct the
liquidator to file the report (Graw et al. 2015).
It has been provided through section 588G that when a the directors of a company indulge in the
process of insolvent trading and the defense provided under the provision of section 588H are
not applicable than the director may be personally liable for the losses which have been incurred
by the organization due to his actions.
Further according to the case of Australian Securities and Investments Commission v Healey and
Others [2011] FCA 717 the directors can be personally liable for the losses which have been
incurred by the company which result out of the breach of directors duties provided through the
legislation. These duties include the duty of due diligence and care, acting in good faith and
proper purpose and not misusing information and position held in the company (Latimer, 2017).
In the case of Commonwealth Bank of Australia v Friedrich (1991) 5 ACSR 115 the directors
had been held personally liable for indulging in insolvent trading.
Application