Facts: Beacon Fun Stuff Pty Ltd is a Tasmanian business that operated successfully for a number of years. It has struggled for the last six months, due to a number of issues, some created by them but others beyond their control. Its directors are Algol and Altair Rigel who are also the major shareholders. Others have owned shares in the past but the only other director has been a friend Vernon Vaspasian. Vernon retired as a director at the end of December 2019. His daughter Vega Vaspasian, who had been a good employee of the business left its employment at the end of April 2020. In an attempt to keep the business operating Algol and Altair borrow $35 000 from ABC Bank Ltd in late April 2020 to purchase a new minivan. They also employ a friend Sharon Strzelecki on the 1 of May 2020 to make souvenirs three days a week and to drive the minivan for the other two days. They promise to pay her $1000 per week for doing this. They tell her they will pay her all of this as a lump sum at the end of July. By the beginning of June 2020, it becomes apparent to Altair, who holds an accounting degree, that the company is now insolvent. Despite this, he does not inform his sister Algol and in facts borrows another $15 000 from ABC Bank to pay for rent on the property that the business is renting in Latrobe at 7 Elk Street. Algol and Altair have not held a director’s meeting since March as they both claim to be ‘too busy’. Although Algol knows that this is wrong, she is relieved that she does not have to turn her mind to the ‘worsening financial woes of the business’. By 30 June 2020 it is apparent that the company cannot continue so Altair and Algol agree to the appointment of a liquidator. Algol and Altair seek your advice. They are concerned that they may have breached some of their director’s duties and the company’s replaceable rules. They are wanting to know if the company or them personally will be liable to repay the wages owing to Sharon and the money owing to ABC Bank? 

Required: Please advise Algol and Altair on the following: 

1. Do you believe that they have breached any of their directors’ duties and if so, which ones? 

2. Whether they may be personally liable for any of the debts due by the company? Please refer to legal cases, legal principles and the provisions of the Corporations Act 2001 (Cth) that are applicable.