How To Avoid Expensive Director Liability

How To Avoid Expensive Director Liability

How To Avoid Expensive Director Liability comes from the lugubrious case of Brett (Liquidator Of Care Community Ltd) v Adam & Anor EWHC 3360 (“Care Community”).

This post should perhaps be called How To Avoid A ‘Fantastically’ Expensive Director Liability’such was the pyrotechnics that appears to have arisen from the numbers in this case.

This was a case in which the Liquidator sued two company Directors. She got judgment for over £800,000. Notably the unconnected creditors of the Company in liquidation amounted to around c.£116,000.

Books And Records: Avoid Director Liability

Yet again following a run of recently reported cases in which Liquidators have sued Directors for receipt of monies from their companies, such as Wow Internet and BM Electrical Solutions, an absence of company records and withholding information does not appear particularly helpful to Directors. Perhaps Directors should be aware that an absence records does not prevent their reconstruction by a liquidator, particularly given the powers available to them. The Court noted the following:

When the directors failed to provide any books and records, the Liquidator’s train of enquiry, starting with the bank statements and the limited accounting information filed at Companies House, raised more questions than they answered. The Respondents continued to withhold information even after the Liquidator commenced proceedings.

The Liquidator advanced a position that the costs, expenses and unconnected cred

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