Answer the following question on directors' duties using the IRAC method taught in class.

Saw Industries Pty Ltd is a hardware store located in Albury, NSW. A decline in house construction in the Albury-Wodonga area in 2020 due to Covid-19 has led to decreased orders for its products. As a result, it has become difficult for the company to meet its debts to creditors and suppliers. Carlos, who is the Chief Financial Officer of the company as well as a director (he is one of 5 company directors) is getting worried that if things don't improve in 2021, the company might become insolvent in 60 days and be unable to pay its creditors and suppliers. Another worry for Carlos is that within that time period, the company still has to pay its employees their salaries. If they do so, the other creditors of the company will not be paid.

What is the potential liability ofCarlos as well as the other directorsof Saw Industries Pty Ltd under the law in this situation? What should the directors do if they want to avoid liability under the law? You must specify exact section/s of the Corporations Act in your answer. (10 marks)