Settlement Secured by Adam Creasey in High-Value Insolvency Misfeasance Claim

Our Managing Director, Adam Creasey, has successfully settled a claim brought by Joint Administrators against two former directors of a construction company who allegedly made unauthorised payments pursuant to Paragraphs 60 and 64 of Schedule B1 of the Insolvency Act 1986.  It was alleged that the directors had breached their duties to the company pursuant to section 171, 172 and 174 of the Companies Act 2006. 

The Joint Administrators argued that their claims arose out of Section 212 of the Insolvency Act 1986, whereby an officeholder is entitled to apply to Court where it appears that a person had misapplied or become accountable for the company’s property or has been guilty of any misfeasance or breach of any fiduciary or other duty in relation to the company.  The remedy sought was that the directors repay, restore or account for the money or property or otherwise that they contribute such sum as compensation as the Court thought fit.

Our client argued that they had honestly and reasonably relied on the ongoing advice of the Joint Administrators prior to the company entering into administration and that, accordingly, they were entitled to rely on the statutory defence pursuant to section 1157 of the Companies Act 2006. 

Claims of this nature are difficult to argue simply because there is a definitive cut-off date for payments to creditors prior to the company going into administration.  Nevertheless, with Adam’s persistence and skill, the claim was settled for around one third of its total value inclusive of costs and interest, representing a significant reduction in the client’s exposure.

If you require assistance in either insolvency or construction matters, please contact us by the link below.