Thick Ice Ltd operates an ice skating rink. The directors of Thick Ice Ltd are Henry (chairperson of the company, non-executive director and retired accountant); Jack (managing director) and Tanya (nonexecutive director and ice skating star).

Last year the directors decided to expand the company's business by opening shops to sell winter sports equipment. The shops commenced trading just before a directors' meeting at which Jack persuaded Henry and Tanya that they only needed to hold board meetings every 3 months, as the company's business was consistently successful under his management and did not require any closer monitoring. Over the last 6 months there has been 2 directors meetings and at each of them Jack has been unable to present financial reports claiming that there were problems with the accounting software that had prevented the reports from being ready. On each occasion Jack had advised Henry and Tanya that everything was fine and he estimated the company was achieving budget.

Yesterday, Henry and Tanya were summoned to an urgent meeting by Jack. He informed them that the new shops had not been profitable; that the company had not been able to pay for the inventory it had purchased at the time of opening the shops; and, the company was now insolvent and would have to be wound up.

Jack admitted to Henry and Tanya that the reason there had been no financial reports was that he had reduced accounting staff to save money but that he had worked very hard to save the company and had done what he thought was best for it. Henry did not consider he had any responsibility for the failure of the company as he had relied on Jack. Tanya felt that as she was only appointed a director because she was a famous skater, the company's business and financial position was not her responsibility.

REQUIRED:

For each director, discuss their performance under the duties of care and diligence AND to prevent insolvent trading (include any relevant defences available).

[Refer to cases and sections of the Corporations Act where appropriate]