Andrew, Becky, Carol and Dean are directors of Icarus Airline Ltd. Icarus operates domestic flights in Australia and is listed in the Australian Securities Exchange (ASX). Icarus relies heavily on Midas Bank Ltd to increase its liquidity by maintaining an overdraft facility with no security, which falls due in full on 1 July 2023. Icarus leases most of its aircraft from a large state-owned airliner that operates nationally and internationally.

In the aftermath of the Covid-19 lockdowns, Midas Bank suspends all credits to Icarus while many of Icarus' suppliers become nervous and service the company only on a strict cash-on-delivery basis. Icarus' directors receive numerous calls and emails from creditors anxious about when they will be paid. Andrew, Becky, Carol and Dean start paying the most demanding creditors while postponing the others. It is only a question of time until cheques start bouncing.

The stock market reacts negatively to Icarus' liquidity problems so Icarus' stock drops sharply. To stop the drop in share prices, on 1June 2021, the board of directors passed a resolution to pay a dividend to shareholders. The generous dividend is paid on 4June 2021 after which it becomes quite clear that Icarus has very little cash reserves to pay creditors and almost no assets to liquidate.

As a last resort and aware that Icarus will not be able to repay Midas Bank in full, Becky transferred on 11 June 2021 the last $750,000 in the company's accounts to Midas Bank for the $1.5 million overdraft facility. She also transfers a Rolls-Royce Phantom that is the property of Icarus to herself as a reward for her hard work and commitment to the company.

By 23 August 2021, the board of directors have no alternative but to put Icarus into voluntary administration, after which the company goes into liquidation. Unsecured creditors complain that they will hardly recover 30 cents on the dollar.

Advice the liquidator about the circumstances, nature, timeframe and defences, if any, regardingthe board of directors' right to pay the dividend in early June 2021.