Company directors have a duty to act in the best interest of creditors (the creditor duty). But at what point is that duty engaged? Put another way, when should directors start worrying about the duties they might owe to creditors? In this briefing, Jolyon Connell, David Fletcher and Oliver Blundell explain how the recent case of Hunt v Singh [1] has provided further guidance on what this means for company directors faced with significant litigation.
The case
Hunt concerned a companys use of a tax avoidance scheme which, when challenged by HMRC, caused the company to owe 36m in unpaid tax liabilities; that, in turn, led the company to enter into insolvent liquidation. The liquidators brought numerous claims against the companys former d…
Read the full article at: https://www.farrer.co.uk/news-and-insights/at-what-point-should-company-directors-consider-the-risk-of-litigation-to-be-an-insolvency-issue/