Media Assignment - Bestjet PDF

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ACCG224 Media Assignment - Bestjet...

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The article that has been chosen is “Bestjet: directors of collapsed travel company referred to regulator” from The Guardian. It was published on January 23rd, 2019. The article details the directors breach of statutory and fiduciary duties through the alleged insolvent trading of current and former directors of Bestjet, a collapsed budget flight booking company, as well as the suspicious involvement of Michael James, husband of Bestjet’s founder Rachel James, in the company’s day-to-day operations. Michael was formerly the owner of Air Australia, a failed airline that was placed into voluntary administration in 2012 due to its $90 million debt. He was banned from managing corporations for three years by ASIC under S206D of the Corporations Act. First of all, the article explains that all three current and former directors may have breached their obligations to act in good faith and in the best interest of the company pursuant to S180 and S181. When running the company the directors continued to incur debt while knowing the company was insolvent. This is a clear breach of S181 as not only is lying to stakeholders not acting in good faith, but these actions are also not in the best interest of the company as it only increased the amount of problems the corporation possessed. Continuing on the topic of insolvent trading, according to the report within the article the company “may have been trading while insolvent from early December 2018”, this is undoubtedly a breach of the Corporation’s Act S588G, which clearly articulates a directors duty to ensure that the company does not incur debts if there are reasonable grounds to suspect that the company is insolvent. As stated before the directors had a duty to act in good faith and they disregarded it, continuing to lie to its stakeholders and incur debt while insolvent, from early December 2018. The directors were likely under the impression that they could get away with trading while insolvent by making more money in the future, and through this mindset clearly contravened the law. The directors breach of S588G means that ASIC can seek civil penalties or compensation for the company, this can be in the form of a fine or disqualification. In this case the provisions of S588G(3) also apply because they have committed an offence and as such criminal penalties can also apply. The article also describes Michaels close involvement with the company’s day to day operations and his activities as a shadow/de facto director. He had been disqualified for 3 years from managing corporations because of the failure of seven companies in the Air Australia group that he was involved with. He made the decision to work behind the scenes as a shadow director despite being aware of his ban and this is a clear contravention of S206D of the corporations act which he was disqualified under. Pursuant to S206A(1) and S588G Michael has committed an offence and as such ASIC can seek criminal penalties for him through not only this...