Directors’ Duty to Act in the Interests of Creditors under Section 172 of the Companies Act 2006 – Aussie Rules Gone Walkabout; BTI 2014 LLC v Sequana SA and Others [2019] EWCA Civ 112

8 Pages Posted: 11 Jun 2019 Last revised: 2 Jul 2019

Date Written: June 10, 2019

Abstract

Sections 171 to 177 of the Companies Act 2006 (“the Act”) codified the duties owed by directors to their companies in equity and at common law. Section 170(4) of the Act states that the codified duties: “shall be interpreted and applied in the same way as common law rules or equitable principles, and regard shall be had to the corresponding common law rules and equitable principles in interpreting and applying the general duties.”

The principles and rules underpinning directors’ duties are generally fully addressed in the case law preceding the codification by the Act. The case law rules adopted by the Act’s codification are reasonably well developed in all areas of directors’ duties. A significant exception to this is the uncertainty surrounding the duty of directors to take account of the interests of creditors once a company becomes (or is close to becoming) insolvent. In giving the judgment of the Court of Appeal in BTI 2014 LLC v Sequana SA and others [2019] EWCA Civ 112 (“Sequana”), David Richards LJ has provided very clear guidance on the operation of this duty and clarifies how and when the duty arises.

Keywords: directors' duties, company law, common law rules, equitable principles, Sequana case note

Suggested Citation

Walton, Peter, Directors’ Duty to Act in the Interests of Creditors under Section 172 of the Companies Act 2006 – Aussie Rules Gone Walkabout; BTI 2014 LLC v Sequana SA and Others [2019] EWCA Civ 112 (June 10, 2019). (2019) 2 Wolverhampton Law Journal, Available at SSRN: https://ssrn.com/abstract=3402097

Peter Walton (Contact Author)

University of Wolverhampton ( email )

Wulfruna Street
Wolverhampton, West Midlands WV1 1SB
United States

HOME PAGE: http://https://www.wlv.ac.uk/

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
273
Abstract Views
808
Rank
203,702
PlumX Metrics