Letter · Commercial & Corporate Advisory
Letter of advice to directors on duties and insolvent trading exposure
Answer-first letter advising directors of a company under financial pressure on their statutory duties, insolvent trading liability, the safe harbour and the immediate steps to protect themselves and creditors.
- Kind
- Letter. A letter or email you adapt and send.
- Where it applies
- Australia, New Zealand, United Kingdom (England and Wales), United States
- AI use
- Red Keep AI out of the decisive steps. A lawyer does the work.
- Law stated as at
- 17 October 2026
- Status
- Maintained. Checked against the cited sources on 17 October 2026.
- Version
- 1
- Source
- Written for this library
When to use it
Use when directors ask what their duties are while the company is under financial stress, or before a significant decision such as new borrowing. Do not send without the lawyer applying the company’s actual financial position. Solvency itself needs accounting input.
How AI may be used
Lawyer-led advice on personal liability. AI may help organise the file and check citations, but the lawyer settles every conclusion and applies it to the company’s position.
AI may
- Build a dated chronology of the company’s financial position from board papers, management accounts and creditor correspondence, with file references
- Check each statutory reference in the draft against the current compilation on the Federal Register of Legislation
- Produce a list of facts the letter relies on that the file does not yet support
AI must not
- Must not form or state a view on whether the company is solvent
- Must not draft the conclusions or recommendations section without the lawyer’s settled advice
- Must not process the company’s financial records in a tool not approved for confidential client information
The lawyer checks
- Facts and assumptions match the documents and instructions, and the letter says which ones it relies on
- Safe harbour preconditions (employee entitlements and tax lodgements) checked against evidence, not assumed
- Advice is addressed to the right clients and conflicts between the company and individual directors are considered
Method: how the Green, Yellow and Red levels are decided. This is guidance for planning, not legal advice.
Read the full text
The full text is for signed-in accounts. It is free. When you sign in you can:
- read the whole precedent, with its drafting notes beside it;
- copy it, or download it as a Word file or Markdown;
- add it to your firm’s knowledge base, so colleagues can find it;
- let the AI tools you connect read it from that knowledge base.
The summary, the law it rests on and the AI-use guidance above stay public. Privacy.
More in Commercial & Corporate Advisory
- Directors' circulating resolution and minutes of directors' meeting
- ASIC Form 484: change to company details (officeholders, addresses, members and shares)
- Mutual confidentiality agreement (Australian law) with AI-tool use restrictions
- AI use, disclosure, data-training and output-warranty clause for commercial contracts
- Board paper and resolution approving adoption of an AI system (risk, accountability, monitoring)
All precedents for Commercial & Corporate Advisory · Tasks and AI use in this area