ABSTRACT
The chapter deals with two main matters. First, issues associated with the commencement of proceedings for a claim that there has been a breach of the obligation to take into account the interests of creditors. Consideration is given to who may commence proceedings, who are respondents to proceedings, how does a breach of obligation relate to wrongful trading, the constraints placed on when proceedings may be commenced and what are the disadvantages with bringing proceedings for a breach of the obligation, such as the possible need to provide security for costs. The second issue is, how do courts determine whether directors are in fact liable for breach of the obligation? Directors are liable even if they say they acted for the benefit of creditors if a court disbelieves them and a court decides that an intelligent and honest person in the position of a director of the company involved, could, in the whole of the circumstances, have reasonably believed that the transaction was for the benefit of the creditors.
