Owllegal also have extensive experience in dealing with businesses in financial difficulties, and it is important to note the following in relation to Companies.
Ordinarily, a director, has a duty to act in the best interests of the company and its shareholders. However, once the view is formed that the company is insolvent (in this context, this means that its assets are exceeded by its liabilities), the duty of the Director is to act primarily in the interests of the
If a director allows the company to continue to incur liabilities at a time when they know, or ought to know, that there is no reasonable prospect of the company avoiding an insolvent liquidation or insolvent administration, then the Director may incur personal liability for the losses sustained by the company’s creditors. In practice, it may not be possible to identify a precise point in time at which any reasonable prospect of avoiding an insolvent liquidation or insolvent administration disappears, early legal advice is essential to protect the Directors personal possessions.