Deciding the parameters of directors' personal liability for actions, or omissions, when a company continues to trade while it is or near insolvent requires a balance to be struck between allowing directors latitude to try to rescue the company and protecting the company's creditors.

In John Doyle Construction v Erith Contractors, the Court of Appeal has further considered the interrelation of insolvency and adjudication, providing guidance on the circumstances in which an adjudication award might be enforceable by a company in liquidation.

The key takeaways

Jurisdiction

The Supreme Court has recently released a decision on directors' duties, which should serve as a timely reminder to all directors of their duties under the Companies Act in circumstances of insolvency. Continuing to trade while insolvent will be a breach of your duties, even if you believe that overall creditors may be better off or the extent of losses will be reduced. It is however welcome confirmation for liquidators that the Courts will enforce the provisions of the Companies Act based on the clear wording of these sections.

Background
General rule
Latest judicial guidance
Summary

A recent decision in the TCC provides the latest judicial guidance on the ability of a company in liquidation to refer a dispute to adjudication.