15. Directors’ liabilities and vulnerable transactions on insolvency

This chapter considers directors’ liabilities on a company going into insolvency. Redress for breach of duty by directors is available through summary action for misfeasance (IA 1986, s 212), fraudulent trading (ss 213, 246ZA), and wrongful trading (ss 214, 246ZB). The scope of these provisions is considered in detail together with the relevant case law. Wrongful trading is potentially a valuable remedy but it is somewhat underused. It may be advantageous instead to challenge certain transactions by the directors prior to insolvency; for example, as transactions at an undervalue (s 238) or preferences (s 239). More broadly, the overall conduct of the directors is reviewed in order to determine whether disqualification is appropriate on the grounds, usually, that they are unfit. All of these matters are addressed in this chapter.