Bringing or defending claims against directors

Bringing & defending claims against directors 

Claims against Directors can be made by different entities, including the Insolvency Service or the Secretary of State for Business, Innovation and Skills, Creditors, Liquidators or Administrators, Co-Shareholders and the Company itself. 

At BTMK we can advise you and represent you in relation to all of these types of claims and we will help you to investigate:

• What the person making the claim alleges you have done
• The duties you are alleged to have breached
• How to mount an effective defence

Our work on behalf of Insolvency Practitioners puts us in a unique position to advise you in relation to these claims and to ensure that you get the best and fairest outcome.

If you’re a director needing to defend a claim or a practitioner looking to bring a claim, get in touch with our specialists today.

Legal Claims Against Directors

At BTMK, we know that every case is unique and it’s important that you receive the best legal advice possible.

The primary legal claims against directors often include, claims for damages and criminal claims for fraud. If you’re a director facing similar claims the results could be disqualification, personal liability for losses to creditors, and in the worst cases even imprisonment.

Whether you are a director under threat of losing your business or facing a claim or an entity making claims against a director, we look at each issue on a case-by-case basis to give you the best legal advice. Your solicitor will always discuss the implications and options of your situation to deliver the best outcome possible.

We work to minimise personal liability, swiftly delivering our services and guiding directors with our legal expertise to ensure a positive resolution.  

Speak to the Experts

BTMK has vast experience representing directors when claims are being made against them, as well as acting for parties who are making claims against directors. 

And whatever the circumstances, it’s advisable to get legal advice quickly. Our specialist team can bring the best outcome, and we will work to get you the fairest resolution in what might be a challenging situation. 

We take the time to review your case properly, offering the best possible legal advice and help you navigate the process.

Breach of duty 

We regularly advise liquidators when a breach of duty occurs, for example when the director has been found not acting in the best interest of the company. 

If there is a breach of duty, the whole company, shareholders and creditors can be implicated, and in severe cases, the result could be criminal sanctions. 

It’s essential that if a breach occurs the company seeks advice and representation from specialist commercial litigation solicitors to protect yourself and your company, ensuring that you reach the best possible outcome.

Claims Against Company Directors 

Claims for damages 

• Negligent misrepresentation: This occurs when a false statement is made. Usually, the statement is presented carelessly, and there are no reasonable grounds to believe it is true. The complainant must have been led to believe the statement is true, and the person making a statement must have had the intent of the other party relying on and believing in the statement.

• Insolvency related claims: This type of claim is made when a company has no money to pay the people they owe in full and so must make special arrangements to make up the amount. 

Types of insolvency include: 

• Bankruptcy 
• Administration 
• Liquidation 
• Receivership 
• Voluntary arrangement with creditors 

With insolvency, you can claim any money owed to you from an insolvency practitioner. However, there is no guarantee that the full amount you are owed will be paid to you as this requires the director to have enough funds. 

• Claims made by shareholders against directors such as unfair prejudice – unfair prejudice when a company has conducted business in a way that unfairly prejudices a group of people, for example solely seeking the interest of the majority shareholders. 
• Claims which may involve criminal as well as civil liability. Such claims could leave the director facing criminal sanctions. 
• Claims made by the Insolvency Service such as director disqualification – this claim is often made when financial mismanagement occurs, prohibiting the director to act in a management capacity for their company. 
• Claims arising from company loans to a director from the company or for repayment of overpaid dividends. 
• Claims where the director may be personally liable if they have given personal guarantees for the company’s borrowing or where directors have allowed the company to trade when insolvent. 

Potential sanctions from a breach 

Restitution of Profits

If a company has suffered a loss due to the director’s action, the court can order any personal profit that the director has made in connection to the misconduct to be relinquished to the company.

Restoration of Property 

When a director has held property that is owned by the company, the company can seek restoration of that property.

Rescission of a Contract 

If the director signs a contract contrary to the company’s intentions then it can be reversed.

Injunctive Relief

A company could bring an injunction against a director to prevent them from carrying out or continuing a breach of their duties. 

Damages

If a company has suffered a loss due to a director’s breach, the director can be ordered to pay compensation. A claimant can be paid expectation damages to cover the difference between what was expected contractually and what was received.

The Specialists at BTMK

Listed in the prestigious Legal 500 Guide to the UK’s top legal practices, we are an established Essex legal firm, with experience and expertise in this area of the law. If you need to make a claim against a director or are a director facing claims, get in touch with our specialist team today.