The book provides an analytical exposition of the law concerning directors' liability for the losses sustained by their companies' creditors, when the directors' companies are in financial distress or become insolvent. It is a detailed one-stop resource for obtaining a good understanding of the law which has developed from legislation and case law. In particular, there is a detailed consideration of what needs to be proved, what defences there are, and what might be the issues of concern for all parties.
A doctrinal method is adopted and there is extensive analysis of the relevant legislation and case law. Rather than merely referring to cases to support propositions, the discussion considers many of the cases in context and in depth and their relevance to the aim of the book. The book also endeavours to provide views, in a practical way, on aspects of the law and it identifies problems and how they may be addressed.
Of interest to legal practitioners and insolvency practitioners alike, in addition the book will be useful to directors, government officials and academics.
Author(s): Andrew Keay
Series: Contemporary Commercial Law
Publisher: Routledge/Informa Law
Year: 2023
Language: English
Pages: 350
City: London
Cover
Half Title
Series
Title
Copyright
Contents
Preface
Table of cases
Table of legislation
Part A Introduction
Chapter 1 Background
Unpaid Debts and Creditors
Directors
The Format, Approach and Purpose of the Book
Chapter 2 Directors
Introduction
General
De Jure Directors
De Facto Directors
Shadow Directors
Distinguishing Between De Facto and Shadow Directors
Executive and Non-Executive Directors
Responsibilities and Obligations
Conclusion
Chapter 3 Creditors
Introduction
Who Is a Creditor?
Contingent Debts
Prospective Debts
Future Debts
Kinds of Creditors
Consensual Creditors
Involuntary Creditors
Creditor Protection
Contractual Protection
Pre-Contract Checks
Security
Monitoring
Imposing Higher Interests
Conclusion
Chapter 4 Claimants and Actions
Introduction
Claimants
Proceedings
Misfeasance
Conclusion
Part B Fraudulent Trading
Chapter 5 Background and Aim
Introduction
Background
Aim
Conclusion
Chapter 6 Fraudulent Trading: The Provision and its Scope
Introduction and Background
The Elements: An Introduction
The Applicant
Applications
Persons Who May Be Liable
Directors and Company Officers
Employees
Outsiders (Accessories)
Criminal Proceedings
Conditions for Liability
Party to the Carrying on of Business
Knowingly
What Constitutes Fraudulent Trading?
Loss
The Order
Relief From Liability
The Destination of Proceeds
Conclusion
Chapter 7 Intent to Defraud and Fraudulent Purpose
Introduction
Creditors
Intent to Defraud
Dishonesty
The Issues
What Actions Can Constitute Fraud?
‘Fraudulent Purpose’
Conclusion
Part C Wrongful Trading
Chapter 8 Wrongful Trading: Background, Aims and Rationale
Introduction
Background
Aims
Rationale
Conclusion
Chapter 9 An Exposition of the Wrongful Trading Provision and its Scope
Introduction
The Applicant
Claims
The Elements Required for Liability
Insolvent Liquidation
Directors
Knowledge
No Reasonable Prospect of Avoiding Insolvent Liquidation
The Point of Liability
What Should Directors Be Doing?
Judicial Considerations
The Types of Companies Involved in Actions
Loss
The Order
Introduction
Judicial Discretion
Compensation in the Order
Payment of Existing Debts With New Money
Concurrent and Additional Liability
Division of Liability
Other Matters Contained in Orders
The Effects of an Order
Compensation Orders Under the Company Directors ’Disqualification Act 1986
The Public Factor
Conclusion
Chapter 10 The Wrongful Trading Defence
Introduction
The Substance of the Defence
What Constitutes ‘Every Step’?
Introduction
Professional Advice
Resignation
Placing the Company Into a Formal Insolvency Regime
Cessation of Business
Miscellaneous Options
Inability to Take Steps to Minimise Losses
Conclusion
Chapter 11 Relief from Liability
Introduction
Relief Under the Companies Act 2006?
Is Relief Under the Companies Act Necessary?
Conclusion
Part D The Obligation to Consider the Interests of Creditors
Chapter 12 The Development of the Obligation
Introduction
The Evolution of the Obligation
The Genesis
The UK Developments of the Last Century: The Early Days
Judicial Opinion in the UK in the 1990s and Early 2000s
Section 172(3) of the Companies Act 2006: The Statutory Aid
Cases Post Companies Act 2006
The Supreme Court in Sequana
Conclusion
Chapter 13 The Nature of and Rationale for the Obligation
Introduction
The Nature of the Obligation
The Foundation of the Obligation
The Traditional Foundation
The Disconnect?
The Case Law and Other Explanations
The Judicial Foundations
Conclusion
Chapter 14 When Does the Obligation Arise?
Introduction
Background
The Importance of the Trigger
Insolvency
The Obligation and Pre-Insolvency Circumstances
Context
The Judicial Formulations
The Supreme Court in Sequana
The Knowledge of the Directors
Reflections
Conclusion
Chapter 15 Complying with the Obligation
Introduction
Context
The Content of the Duty
Insolvency
When Insolvent Liquidation or Administration Is Probable
Circumstances Short of Insolvency
Summary
The Nature of the Consideration to Be Given to Creditor Interests
Balancing
Paramountcy of Creditor Interests
Factors and Issues in Considering Creditor Interests
Creditors v Creditors
Conclusion
Chapter 16 Commencing Proceedings and Determining Liability
Introduction
Who Can Commence Proceedings?
Respondents to Proceedings
The Relationship to Wrongful Trading
Limitation of Actions
Disadvantages With Proceedings
Granting Judicial Relief
Security for Costs
Enforcement
Proceeds of Judgment
Determining Liability
Conclusion
Chapter 17 Relief from Liability
Introduction
Ratification
Judicial Relief
Conclusion
Part E Diminution of Company Funds
Chapter 18 Unlawful Distributions
Introduction
Starting Points
Distributions and the Legislative Framework
Introduction
In General
Public Companies
Dividends
Liability for Unlawful Distributions
Member Liability
Director Liability
Auditor Liability
Relief From Liability
Conclusion
Index
