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Jamie and Paul are the directors of a small Company, Madyou Pty Ltd, which runs a small business videoing wedding and birthday celebrations. Paul’s friend Irene often lines up contracts for the business, oversees the books and gives general day to day advice about which jobs to do and what price to charge.
In November, due to some stiff competition from a new business called Tarantino Pics Pty Ltd, Madyou starts to experience financial troubles. The rent on the office is overdue by 6 weeks and several suppliers have outstanding bills of several weeks. On Irene’s advice, Madyou signs a contract with a local bridal magazine for 6 months worth of glossy page long adverts at a total cost of $18,000. This was hoped to bring in more business.
In April, the business deteriorated even further. The rent was now over 6 months overdue and a long list of bills had not been paid. On May 2nd the company went into liquidation without having paid for the advertising.
Advise Jamie and Paul on their personal liability for the outstanding debts. Is there anyone else who might be personally liable?
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