Question 5 (10 marks)

Tanked Pty Ltd (Tanked) has four directors who have been found guilty of insolvent trading under s 588G of the Corporations Act 2001 (Cth). Holly, one of the directors, believes she is not liable as she relied on a financial report prepared by the accounting intern that showed the financial situation of Tanked was good. Bob also believes he is not liable as he stood down from management some months earlier to assist his unwell wife. Richmond also believes he is not liable as he didnt read the financial report from the Chief Financial Officer which showed Tanked was heading towards insolvency.

Advise Holly, Bob and Richmond as to what defences they might be able to raise to avoid liability for insolvent trading.