We recently published a blog post on the Supreme Court's judgment in Stanford International Bank Ltd (In Liquidation) v HSBC Bank plc [2022] UKSC 34, in which the Supreme Court upheld the Court of Appeal’s decision to strike out a claim brought by the liquidators of a Ponzi scheme against its correspondent bank, alleging that the bank breached its so-called Quincecare duty to take sufficient care that monies paid out from the accounts under its control were being paid out properly.
The judgment also provides further clarity on the circumstances in which a distressed or insolvent company may seek to make claims against its directors, which colleagues in our RTI team have considered in further detail.
The key aspects affecting directors' liabilities presented in the Supreme Court ruling are that:
- At least where unlawful preference rules are not engaged, loss to the company is a necessary element of the company's claims against its directors for misappropriation of the company's assets; and
- Building on the principles considered in BTI 2014 LLC v Sequana SA & Ors [2022] UKSC 25, a company's losses for these purposes are not one and the same as those suffered by its creditors.
This means that, where other remedies are not available to recover sums paid out to third parties in breach of duty, insolvency practitioners and creditors alike should not assume that recourse will lie against defaulting directors to increase the amounts distributable upon liquidation.
This is the first reported judgment to consider the landmark BTI v Sequana decision which clarified the duties owed by directors of distressed and insolvent companies and was the subject of a recent briefing paper produced by our restructuring team.
For a more detailed analysis of this decision relating to claims against directors of distressed companies, please see our Restructuring, Turnaround and Insolvency Legal Briefing.
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