Director do’s and dont’s

Now that it is apparent the Company is insolvent, the directors must act to preserve the Company’s assets and minimise its liabilities in the interests of all creditors. It is essential to avoid any actions that could result in preferential treatment of individual creditors or members, including secured creditors. Goods or services must not be obtained on credit, and deliveries should only be accepted if they are essential for asset realisation, paid for from designated funds, and fully documented. Deposits for future work should not be accepted unless the Company can fulfil the order in full.

All Company assets must be protected and adequately insured. No assets should be sold or removed without maintaining a detailed record of the transaction, and disposals should be strictly limited to essential costs. Creditors must not be allowed to take possession of assets, and any claims under reservation of title should be recorded and referred for later consideration.

Payments should only be made where necessary to preserve assets or, if trading continues, to ensure profitability and the ability to meet all liabilities incurred. Directors must be confident that continued trading will result in a better outcome for creditors than immediate cessation. We urge caution in this regard, as directors who continue trading when there is no reasonable prospect of avoiding insolvent liquidation may be held personally liable for wrongful trading unless they can demonstrate that all reasonable steps were taken to minimise potential losses to creditors.