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The creditors’ claims (4)

11 July 2014 / Simon Duncan
Issue: 7614 / Categories: Features , Commercial
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Simon Duncan concludes his series of articles on the right to sue former directors

Section 217 of the Insolvency Act 1986 (IA 1986) and s 15 of the Company Directors Disqualification Act 1986 (CDDA 1986) are derived from the same source and aimed at the same mischief. That is to say, these sections make delinquent directors co-debtors with the company for the company’s debts. In doing this, these sections strengthen creditors’ rights of redress. They allow creditors to act when the evidence suggests that a “phoenix” company has resumed the failed company’s business improperly, or when creditors have lost money in the liquidation of a company run by a disqualified director.

Re Prestige Grindings Ltd

Although the Acts themselves are silent as to who may bring a claim pursuant to these sections, the case law makes it clear that it is the creditors that have the requisite standing (see “The creditors’ claims” 162 NLJ 7530, p 1175 and Re Prestige Grindings Ltd [2006] BCC 421; [2005] EWHC 3076).

Prestige Grinding

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