Claims against Directors
Most UK companies operate as limited companies, but limited liability does not remove all personal risk for directors. When a business enters insolvency, directors may still be held accountable for how they managed the company beforehand. Decisions made in the lead up to insolvency are often closely reviewed, particularly where creditors may have been affected. We support directors and Insolvency Practitioners with clear, practical advice to resolve disputes and protect interests at every stage.
Wrongful trading
A Liquidator may bring a claim against a director for wrongful trading. Directors can face claims for wrongful trading if they continue to operate a company when they knew, or should have known, that insolvency was unavoidable. Getting early advice can help minimise risk and demonstrate that reasonable steps were taken to protect creditors.
Fraudulent trading
Fraudulent trading involves carrying on business with intent to deceive creditors or for any fraudulent purpose. These claims are serious and often complex. We provide guidance to help you understand your position and respond confidently.
Preference payments
A claim may arise where a company gives preferential treatment to certain creditors before insolvency. Insolvency Practitioners review transactions carefully. We help assess exposure and provide practical support to resolve issues efficiently.
Misfeasance
Misfeasance claims relate to breaches of duty or misuse of company funds by directors. These cases often involve detailed financial review. Our team works closely with you to understand the facts and present a clear and robust response.
Transactions at an undervalue
Transactions at an undervalue occur where assets are sold for less than their true worth before insolvency. These arrangements may be challenged by a Liquidator. We help identify risks and guide you towards a practical resolution.
Extortionate credit transactions
Claims may arise where a company enters into unfair or excessively costly credit agreements before insolvency. We provide clear advice on potential exposure and support you in addressing any challenge raised.
Investigations by Liquidators
Liquidators have a duty to investigate the company’s affairs and review director conduct. If those investigations reveal evidence to suggest that the directors, or a connected party, have breached one of the above statutory offences then the Liquidator will have no option but to pursue the matter.
Taking early advice
Early advice can make a significant difference in protecting your position and resolving matters effectively.
How we support you
We regularly advise Insolvency Practitioners and directors on claims arising from insolvency. Our approach is thorough, commercial and focused on solutions, helping you move forward with clarity and confidence.
Questions we’re often asked
Once directors know or ought to know that a company is insolvent or likely to become insolvent, their duties shift. They must have regard to the interests of creditors as a whole, rather than solely to shareholders. Directors may face personal liability for wrongful trading (continuing to incur debts when there was no reasonable prospect of avoiding insolvent liquidation) or fraudulent trading (carrying on business with intent to defraud creditors). Directors should take professional advice promptly and document their decision-making carefully.
Yes. Liability for wrongful trading, fraudulent trading, and misfeasance extends beyond formally appointed directors. Shadow directors (individuals which exercises significant influence within the Company and upon providing directions or instructions, the formal directors are accustomed to act) and de facto directors (individuals who assume the role of director without formal appointment) can also be held liable. This is particularly relevant where parent companies, dominant shareholders, or advisers exercise significant control over an insolvent subsidiary's affairs.
Yes. Insolvency practitioners and courts can set aside certain pre-insolvency transactions, including preferences (payments or transfers that favour one creditor over others), transactions at an undervalue (disposals for significantly less than market value), and transactions defrauding creditors. There are typically "look-back" or "suspect" periods during which such transactions are vulnerable to challenge, and the applicable period varies depending on the type of transaction and the jurisdiction.
A misfeasance claim (under Section 212 of the Insolvency Act 1986 in England and Wales) provides a summary mechanism by which breaches of duty, misapplication, or retention of company property by directors, liquidators, or others involved in the management of the company can be pursued in the course of a winding up. It does not create a new cause of action but provides a procedural shortcut for Liquidators to enforce existing obligations.
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