TT-Line's board of directors would face severe career and reputational damage if the state-owned company was operating while insolvent, Treasurer Eric Abetz has said.

In a recent review of the company's finances, Auditor-General Martin Thompson formed the opinion that TT-Line was insolvent from mid-July, which has been dismissed by the company's board and the government.

Mr Thompson informed the board of his opinion on July 22, and advised the Australian Securities and Investments Commission on July 31 that he suspected TT-Line's directors were in breach of the requirements of the Corporations Act.

Mr Abetz told a budget estimates committee on Tuesday that the directors had sought and received independent advice confirming the company is solvent, which had been accepted by the governm

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