Claims Against Directors

We are a specialist insolvency litigation practice and assist directors of companies to defend claims brought against them.

Once a company is placed into liquidation, liquidators may bring claims against directors for:

  • Director loan payments (DLA): These are payments that the directors have made from the company to themselves and which the liquidator seek to recover from the directors personally.
  • Preference payments: The company and the recipient of monies paid to it by the company is sometimes required to repay the money to the liquidator if the liquidator argues that the company paid that particular creditor in preference to others. These are known as preference payments and can be set aside by the Court by an application by the liquidator of the company by demonstrating that the act had the effect of putting that person (whether it is a creditor, surety or guarantor) in a position which, in the event of the company going into insolvent liquidation, be better placed than the position he would have been in if that act or thing had not been done.
  • Setting aside property transactions: A liquidator may also make an application to set aside a property transaction where the property had been owned by the company and then transferred to the director or his or her family member or associate. These are also known as transactions at an undervalue where the company is said not to have received the market value price for the asset which it had been deprived of.
  • Wrongful or fraudulent trading: Wrongful trading claims are those where the liquidator argues that the company should not have traded as it should have been clear to the director that ongoing trading would have resulted in creditors not being paid. The director is then to show why he/she continued to trade. We may be required to work with specialist accountants in defending these claims. The liquidator in such cases will be required to demonstrate to the Court that a director knew or ought to have known that there was no reasonable prospect of paying creditors and avoiding liquidation. This focuses on the mismanagement of the company. In a case where the liquidator alleges fraudulent trading, the liquidator will be required to prove that there had been a gift which had been made or there has been a transaction at an undervalue that has defrauded the creditors by placing the assets beyond reach of a creditor.
  • Director disqualification proceedings: We are able to assist directors to defend these claims. The Court can disqualify a director for a minimum period of 2 years and a maximum of 15 years.or guarantor) in a position which, in the event of the company going into insolvent liquidation, be better placed than the position he would have been in if that act or thing had not been done.

Challenging Liquidators' Costs

We can also advise directors and creditors on how to challenge these costs. We will have to show that there is a surplus amount available to either the shareholders or creditors, in the event that these costs are reduced. 

You will only be able to formally challenge the liquidator's remuneration if you either alone, or collectively with other creditors, exceed 10% in value of the total creditor claims. Any challenge to the liquidator's remuneration must be brought within 8 weeks of you receiving the relevant report.

We do not act for trustees or liquidators to ensure that there is no possible conflict of interest especially as most solicitors in this field act for insolvency practitioners and liquidators and rely on them for repeat business.