Personal Liability Of Administrators

The personal liability arising under Division 9 of Part 5.3 A of the Corporations Act 2001 (Cth) (Act) often provides one of the greatest risks facing administrators on accepting an appointment. These risks can limit restructuring options available through a voluntary administration as an administrator is unlikely to want to continue to trade on a company without funding if trading on the company will expose them to personal liabilities for goods and services acquired, rent and other costs which cannot be covered by the available income and assets of the company.

Crosbie IMO Godfreys Group Pty Ltd [2024] FCA 60 (Godfreys Case) is a recent example from a growing line of cases in which courts have made orders limiting voluntary administrators' liabilities. This case illustrates the primary factors considered by the Court and the principles applied when granting relief to vary the personal liability of administrators.