Last week we witnessed a precedent setting insolvency judgement in the matter of BHS Ltd – the first time a misfeasance trading claim has been successfully recognised.
In a 533-page High Court judgement, two former BHS directors were ordered to pay £13.5 million each to liquidators after they were found to have continued trading – thanks to a capital investment – despite both having knowledge that there was no reasonable prospect of avoiding insolvent liquidation or administration. They were therefore found guilty of wrongful trading and misfeasance under the Insolvency Act 1986.
This case is not over yet. Later this month a judge could order an even larger award, as much as £133.5 million, to recognise how the directors failed in their fiduciary duties by continuing to trade rather than commencing the insolvency process. We’ll keep you posted on the outcome and its implications.
#insolvencylaw
