## (a) Controlling Act
**Corporations Act 2001 (Cth)**. Insolvency is the **s 95A** cash-flow test: inability to pay debts as and when they become due and payable.

## (b) Directors’ duties engaged
- **s 180(1) — care and diligence:** reasonable director standard; ignoring insolvency warnings and continuing to incur supplier credit risks breach.
- **s 181(1) — good faith, best interests and proper purpose:** loyalty to the company; in insolvency, creditor interests are relevant. Diverting a profitable contract to the director’s own company is not for the company’s benefit/proper purpose.
- **s 182(1) — improper use of position:** no use of office to gain an advantage for the director/another company or cause detriment to the company; the diverted contract fits this.
- **s 183(1) — improper use of information:** no use of company/customer information obtained through the directorship to gain advantage or cause detriment.

These are civil penalty provisions; dishonest or reckless conduct may also engage **s 184** criminal offences.

## (c) Insolvent trading provision engaged
**s 588G — director’s duty to prevent insolvent trading by the company.** Each stock order on supplier credit is a new debt. The company is insolvent under s 95A, and the bookkeeper warning/no funding give reasonable grounds, and likely actual awareness, to suspect insolvency. The civil contravention is **s 588G(2)**, with potential compensation/personal liability for creditor loss under **ss 588J and 588M**; dishonest failure may be criminal under **s 588G(3)**.