Although not directly concerned with directors' liabilities, the recent Supreme Court judgment in Stanford International Bank Ltd v HSBC Bank PLC [2022] UKSC 34 (previously considered here) provides further clarity on the circumstances in which a distressed or insolvent company may seek to make claims against its directors.
The key aspects affecting directors' liabilities are that:
- at least where unlawful preference rules are not engaged, loss to the company is a necessary element of the company's claims against its directors for misappropriation of the company's assets; and
- building on the principles considered in the landmark BTI v Sequana decision (considered here), a company's losses for these purposes are not one and the same as those suffered by its creditors.
This means that, where other remedies are not available to recover sums paid out to third parties in breach of duty, insolvency practitioners and creditors alike should not assume that recourse will lie against defaulting directors to increase the amounts distributable upon liquidation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.