In circumstances where a company is insolvent or on the verge of insolvency, the duties of directors shift so that they are owed to the company for the benefit of creditors as a whole (rather than shareholders).
This means that the directors’ actions have to be carefully considered so that they cannot later be accused of, for example, transferring the company’s assets at an undervalue or preferring one creditor over another.
We regularly advise directors faced with these challenging situations. We review the latest management accounts and cash flow forecasts to assess the solvency position of the company. We attend board meetings and provide detailed written advice to directors prior to them taking a particular course of action. We also ensure that all decisions of directors are carefully justified and documented in board minutes.
We also act for directors on a range of contentious issues, including defending misfeasance actions brought by insolvency practitioners and defending director disqualification proceedings and phoenix trading proceedings brought by the secretary of state.