Decisions as to whether or not a person should be categorised as a Permitted Individual pursuant to section 56AD(1) of the Act, require an analysis of whether all reasonable steps were taken by the individual to prevent the coming into existence of the “Relevant Event” (i.e. a bankruptcy event or a corporate insolvency event).

Consequently, this means that the analysis required in a permitted individual review requires:

a. On occasion:

i. Review of the financial statements to determine if the cash flow and capitalisation of the company were managed appropriately;

ii. A review of the appropriateness of litigation undertaken;

iii. Consideration of compliance with director’s duties pursuant to the Corporations Act;

iv. Consideration of insolvency issues that arise pursuant to the Corporations Act; and

v. Whether there has been any phoenix activity;

b. In all cases, the proper application of the statutory test provided in section 56AD(8).

The following is a table of review hearings Malcolm has conducted as advocate in relation to this type of matter: