Genesis Pty Ltd is having difficulty meeting some of its obligations to creditors. The managing director is increasingly becoming concerned that the company is about to run out of money and will not be able to meet some significant obligations in the next two weeks. The company knows it has to meet payroll commitments, which may mean other creditors will not be paid.

Required:

Explain to the managing director his potential liability under the Corporations Act 2001 (Cth) law as it applies to directors in this situation.

ANSWER: