The High Court has ordered two former directors of British Home Stores (BHS) to pay compensation of £110 million in respect of misfeasance claims brought by the former retailer’s liquidators (Wright v Chappell [2024] EWHC 2166 (Ch)).
The directors were found liable in June 2024 for wrongful trading – that is, continuing to trade when the directors knew, or ought to have known, that there was no reasonable prospect of avoiding insolvency under section 214 of the Insolvency Act 1986 – and misfeasance, because they breached their directors’ duties by entering into new finance arrangements rather than deciding to place the companies into insolvent liquidation. Significant sums of compensation were ordered to be paid in respect of wrongful trading in judgments handed down in June 2024. See our blog post here for more details.
This latest decision relates to assessing the equitable compensation to be paid for misfeasance. The High Court held the starting point is that directors are liable for the total increase in net deficiency of a company’s assets where their breaches enabled the company to continue to trade. For more information on how the compensation was calculated, see this post on our Litigation Notes blog.
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