If a former director or officer of an insolvent company has breached his/her fiduciary duty to the company they may well face a claim for misfeasance against them.
If a former director or officer of an insolvent company has breached his/her fiduciary duty to the company they may well face a claim for misfeasance against them. Pursuant to section 212 of the Insolvency Act 1986 (IA 1986) a former director or officer of the company is guilty of misfeasance if they have “misapplied or retained, or become accountable for, any money or other property of the company, or been guilty of any misfeasance or breach of any fiduciary or other duty in relation to the company.” As can be seen from this definition of misfeasance it is quite wide ranging and all-encompassing which has led to us seeing an increase of claims of this nature in recent years.
Why would you need this service?
If you are a former director or officer of an insolvency company, and you have been contacted by an insolvency practitioner; or creditor; or the Official Receiver in connection allegations of you:
- Breaching your duties to the insolvent company; and/or
- Misapplying or retaining company funds and/or
- You failing to account to the company
- You are likely to require prompt legal advice.
Who can claim for misfeasance?
In most cases, the appointed Liquidator will seek to bring a claim for misfeasance against a director/company officer on behalf of the company. However, others may bring a claim for misfeasance, including:
- Administrators
- A creditor;
- A contributory to the company’s capital;
- The Official Receiver.
Can I challenge a claim for misfeasance?
You may be able to challenge a claim for misfeasance against you. The challenges to a misfeasance claim can be very technical and therefore a specialist lawyer is required to consider the specific details of the allegations.
If a director/company officer wishes to consider their options in relation to challenging any potential action, legal advice should be sought at an early stage and preferably when the director is dealing with the Liquidator or Administrator, by completing questionnaires or attending interviews.
If you are contacted by the Liquidator or Administrator, you should explain that you wish to seek legal advice before reverting to them. We would suggest you contact our team of experts immediately in that case.
How much does it cost?
An estimate of costs will be provided from the outset based on the type of work required.
The lawyers at Bankruptcy Solicitors are vastly experienced in advising clients who are faced with misfeasance claims and have successfully defended clients who were subjected to such proceedings. Our lawyers will be able to provide you with bespoke and cost effective advice tailored to your circumstances.
For more information, please contact our team of experts by emailing insolvency@bankruptcy-solicitors.com or call 020 8308 3610 today.