Reference no: EM132489048

SleepTight Insurance Ltd ('STI') sells commercial property and casualty insurance in the Australian market.  In the first half of 2020, it has faced a flood of business interruption claims by businesses facing losses due to the novel coronavirus.  In April 2020 STI's board issues a press release stating that its profits are holding steady despite the coronavirus claims. STI's share price soared on the announcement.  In fact, STI's profits have been seriously impaired by the magnitude of the claims that it is facing.  

STI's board issues a second press release correcting the error two weeks later, causing the share price to fall by 50%.  STI is now facing a $100 million shareholder class action brought by shareholders who suffered losses due to buying STI shares at the inflated price.  STI's board was wrongly informed because of a basic mathematics error in financial reports prepared by its Chief Financial Officer.  The reports had supposedly been reviewed by STI's auditor, Perry Woodhouse Ltd, as well as STI's audit committee.  However, if anybody on STI's board had bothered reading the financial reports before they approved the press release, they would have noticed the mathematical error: it was glaringly obvious.  

STI filed for insolvency and is now in liquidation.

You are a lawyer representing the liquidator.  Advise whether you think the company has a good claim against STI's board for breach of the duty of care in connection with the erroneous press release.  Don't forget to consider any defences that might apply.