Directors’ Duties & Board Advice
When a company is or may be about to become insolvent, the duties of the directors change significantly. We understand that this can be a challenging time, but we also know what a difference it can make when you understand what needs to happen and the best way to go about it.
In these circumstances the duties to the creditors overrides all other duties and there can be severe consequences for getting it wrong.
If a director fails in that overriding duty, they could face a number of claims against them personally if the company enters into administration or liquidation. These can include claims for misfeasance/ breach of duty, wrongful trading and fraudulent trading. It can also lead to director disqualification for up to 15 years and under amendments to the Company Directors Disqualification Act, the Insolvency Service can now apply to court (on behalf of the Secretary of State) for a “compensation order” where a director has been disqualified and their behaviour has caused a quantifiable loss to creditors of an insolvent company.
How we can help
Our team of experts have the knowledge and experience to advise you on all aspects of directors’ duties in an insolvency context. This includes advising directors on their duties in the lead up to insolvency and defending directors who are subject to claims from Administrators and Liquidators.
We also have a proven track record of advising ‘the other side’ – when we act for Administrators and Liquidators who are bringing claims against directors who have not properly discharged their duties.
We’ll guide you through these turbulent events and make sure you know exactly where you stand and what you can expect.
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Comment & Opinion
Can administrators be held criminally liable for redundancy failures?
15th March 2023
