A company or group's financial distress causes significant turmoil for its owners, directors, managers, employees and often its suppliers and other creditors. For directors in particular, there are significant responsibilities and potential personal liabilities associated with the management of a company where its business is in financial distress. In this White Paper,we provide an overview of the relevant statutory and fiduciary duties of directors where a company is within the "zone of insolvency" in certain Western European jurisdictions and certain measures that the applicable governments have introduced as a result of COVID-19. We also highlight certain potential personal liabilities for directors and set out some of the practical issues directors need to consider and suggest some of the steps they should be taking at this time in order to safeguard the interests of creditors and minimise the risk of personal liability.
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.