As expected, the scope of directors' duties whilst a company is in financial difficulties has been the source of further consideration by the Court. The recent case of Hunt v Singh [2023] EWHC 1784 raised the question as to whether, following the Supreme Court decision in BTI 2014 LLC v Sequana SA, a director's duty to take into account the interests of creditors arises where the company is at the relevant time insolvent if a disputed liability comes to fruition.
Ben Gold, partner in RPC’s professional and financial risk team, explains how a recent Supreme Court case (BTI v Sequana) confirms company directors owe a duty to creditors if the company nears balance sheet or cash flow insolvency.
This ‘creditor duty’ is of increasing significance as insolvencies rise.
Sova Capital Ltd (“Sova”) was an FCA authorised and regulated broker. Before it went into Special Administration, Sova provided investment brokerage services to institutional and corporate clients, mostly trading in the Russian market.
It is widely anticipated that the next twelve months could be a challenging period for many businesses in the UK and that there could be a significant rise in the number of companies in financial distress.
Where this is the case, the directors of those companies will need to be increasingly mindful of the duties they have to the company's creditors, as well as to its shareholders.
The war in Ukraine continues and the economic effect of sanctions against businesses that are connected to the Russian government are now being felt in earnest. Unsurprisingly, sanctions are becoming an increasingly hot topic for insolvency practitioners.
Recent months have seen the Courts hand down some important decisions, which provide helpful guidance on situations where the sanctions regime interfaces with insolvency processes. We have summarised three of the most significant in this article.