Our Restructuring & Insolvency team has a great deal of experience in respect of dealing with claims against directors for breaches of their fiduciary duties. The principal duty of the director in a UK company is not to own the company but to manage the company for the benefit of the shareholders. As a result there are numerous opportunities for directors to be targeted for how they are running the company.
Originally the duties that a director had were understood on the basis of a number of decisions in legal cases in the courts of England & Wales. These cases and the decisions of the courts that came out of them highlighted the need for the directors to have the following characteristics when managing the companies over which they were appointed:
- loyal to the original intentions of the company
- good management of the company
These headlines, which were established by the courts, became known as a director’s “fiduciary duties” and they headlined the need for the directors to act within a relationship of trust and confidence with the shareholders who were, effectively, handing over their investment.
The Companies Act 2006 led to the writing down of the duties which could be expected of the directors of companies for the first time.
Our team will approach all potential claims being levied by liquidators or creditors in the same way, which is to carry out an initial assessment of the strengths of the claim. Once this has been done then the team will, using a commercially orientated based approach, discuss with you what you want to achieve out of your instruction. This will in most cases result in our team attempting to negotiate a settlement, to settle the potential claim on the best available terms.
The experience that our team has in dealing with claims involving a director’s liability is usually the crucial factor in our being able to resolve the issues to the satisfaction of our client. As a result of our experience and the awareness of the arguments that are used on both sides of the claim (gained from experience of acting for insolvency practitioners), means that we are in an ideal position to be able to seek a settlement on the best terms available as we are aware of the positions usually adopted by the liquidators in these types of cases.