Disciplining the Directors of Insolvent Companies: An Essay in Honour of Gabriel Moss QC

Insolvency Intelligence, 33(1) 2-10, 2020

Oxford Legal Studies Research Paper No. 11/2020

13 Pages Posted: 20 Apr 2020

See all articles by Kristin van Zwieten

Kristin van Zwieten

University of Oxford - Faculty of Law

Date Written: December 20, 2019

Abstract

In this piece, written in honour of Gabriel Moss QC, I make some observations about three recent developments in the law governing the treatment of the directors of insolvent companies: first, the decision of Mr Justice Snowden in Grant v Ralls on the approach to determining quantum in ‘wrongful trading’ cases; secondly, the decision of the Court of Appeal in BAT Industries Plc v Sequana SA on the scope the common law duty-shifting rule (the ‘rule in West Mercia Safetywear v Dodd’); thirdly, the new compensation order regime in the Company Directors Disqualification Act 1986, on which there is now authority.

I conclude that Ralls was principled, in the sense of being in line with the authorities, but would be unattractive in policy terms were it not for the rule in West Mercia Safetywear Ltd v Dodd; that the refinement of that rule in Sequana is attractive as a matter of principle and policy, but that the application of the rule in cases involving factual preferences (of which Ralls is an example) is remedially somewhat difficult; and that the introduction of the compensation order to the Company Directors Disqualification Act 1986 provides a clearer route to a remedy in a preference case, but is unattractive in policy terms because it goes far beyond such cases without an obvious reason for doing so, such that we may well have been better off without the reform.

Keywords: Corporate Bankruptcy; Directors’ Duties

Suggested Citation

van Zwieten, Kristin, Disciplining the Directors of Insolvent Companies: An Essay in Honour of Gabriel Moss QC (December 20, 2019). Insolvency Intelligence, 33(1) 2-10, 2020; Oxford Legal Studies Research Paper No. 11/2020. Available at SSRN: https://ssrn.com/abstract=3560935

Kristin Van Zwieten (Contact Author)

University of Oxford - Faculty of Law ( email )

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