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In Australia recently, there has been an examination of the breadth of the directors' duty to act in the best interests of the company. In the corporate social responsibility debate about the external stakeholders for whom directors should have consideration, unsecured creditors, particularly small trade creditors, are overlooked, perhaps on the assumption that they will have taken precautions against their risk of loss and therefore are undeserving of further compensation. This article will argue that these unsecured creditors are as deserving of protection as other members of the corporate team who combine to ensure the enterprise is a success. It recommends that there be a mandatory provision requiring directors to prioritise the interests of unsecured creditors where the company is on the brink of insolvency. To have any real meaning, the duty must have content that allows its enforcement, and that enforcement should be by the parties affected by its breach.
Document Type: Research Article
Publication date: January 1, 2007
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The Oxford University Commonwealth Law Journal (OUCLJ) is the flagship journal of Oxford University's postgraduate law community, produced under the aegis of the Law Faculty. It is published twice-yearly and endeavours to foster international academic debate and exchange on a wide range of legal topics of interest throughout the Commonwealth.