Friday, December 2, 2011

Director sentenced to jail for insolvent trading

The County Court of Victoria has this week sentenced Ms Anula Kumari Kauye, former director of International Consulting Group Pty Ltd (ICG), to jail for three years and two months following charges brought by ASIC.

Ms Kauye had pleaded guilty to engaging in insolvent trading, theft and providing a false affidavit. In the County Court proceedings, ASIC had alleged that Ms Kauye had allowed ICG to trade whilst insolvent and had stolen funds from US companies. When a creditor issued a statutory demand in relation to ICG's debts, Ms Kauye provided an affidavit containing false details about the use of the funds in order to set aside the statutory demand.

ASIC has issued a media release about the decision in which ASIC Commissioner Michael Dwyer said that:
Directors must be aware that they breach the law if they incur debts when a company is insolvent or likely to become insolvent. The law is designed to deter directors from incurring debts to unsuspecting creditors of a company. Directors should take action early and seek appropriate advice.
This decision is a rare example of a director being sentenced to imprisonment for breaching the Australian insolvent trading laws.