The Contours and Content of the ‘Creditors’ Interests Duty’
Published in the Journal of Corporate Law Studies, Vol. 21, No. 1, 2021, pp. 85-108
21 Pages Posted: 17 Jun 2020 Last revised: 9 Mar 2021
Date Written: March 16, 2020
It is well established in a number of Commonwealth jurisdictions that company directors are subject to a duty to consider the interests of creditors as the company nears insolvency. The precise contours of this duty are, however, indeterminate. Particular questions surround when the duty arises and what it requires of directors. Courts in the UK and Australia have provided different answers to these questions. This article critically examines jurisprudence from the UK and Australia and concludes that the position adopted by the England and Wales Court of Appeal is preferable.
Keywords: creditors’ interests duty; directors’ duties; duty to act in the interests of the company; Companies Act 2006 (UK) s 172(3); Corporations Act 2001 (Cth) s 181
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