The Directors of RED are supposed to act on behalf of the Company and in the best interests of the shareholders that own the company. So at the moment the shareholders are taking the can for the decisions made by the Directors. If it was found that the Directors deceived the bank at any time in the process of securing the loan or subsequently during the period of the loan, then the bank could find the company in default and make an immediate demand for the repayment of the loan. This is probably what has happened IMO and hence the $16.4m repayment as part of the ‘budget’ presented to the shareholders in the prospectuses etc.
It is therefore beholden of the shareholders to make a claim against the Directors of the company for having caused the default in the loan if this was triggered by these means. The legal advice we have to date suggests this would trigger other sanctions against the Directors. If criminal liability is found it takes two forms, Strict Liability, where the Directors claim the Sergeant Shultz defence “I knew nothing” and Absolute Liability where it is found they knew everything. It is more likely that it would be mixture of the two on the RED Board if it came to this.
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