5 May 2021: You may be one of the 12.8million people who recently tuned into the final episode of Series 6 of Line of Duty. If so, you will have noticed the not so subtle message regarding the duties of those in public office to the public they serve.
You may also be a company director and if so, no doubt you will be aware of your duties as laid out within the Companies Act 2006. Hopefully, you are no ‘H/fourth man’ and therefore you do actually care somewhat about these duties and they guide your conduct. Ensuring that you ‘act within your powers’, ‘promote the success of the company’ and ‘exercise reasonable care, skill and diligence’ will already be staples of your working mind set.
However, you may not be so aware of the further lines of duties placed upon a company director when a business becomes insolvent. If you find yourself in this position, additional care needs to be taken to ensure that no wrong steps are taken to avoid liabilities incurred due to nothing more than ignorance of the additional duties.
When entering liquidation, the appointed liquidator will advise the director of their additional duties. Including co-operating with the liquidator, furnishing creditors with a statement of affairs as well as attending a meeting of creditors, if one is requested by creditors.
The main concern however for many directors in these circumstances is more likely to be the duties already placed on them of which they were unaware. Once a company is technically insolvent, these responsibilities include safeguarding company assets and acting in the best interests of creditors. Directors need to be mindful that the above duties start as soon as the company is insolvent i.e. before any formal process has commenced. As, once appointed, a liquidator will have the benefit of hindsight when reviewing director’s decisions as part of their investigations, not unlike AC12.
If you are concerned about the financial viability of your company and would like some guidance regarding the additional duties that may be placed upon you, please do not hesitate to contact us at BRI. We treat all enquiries confidentially and will provide the right advice first time, every time regardless of the fee income for us.