Misfeasance meaning

Checklist This checklist concerns claims under sections 212–214, 246ZA and 246ZB of the Insolvency Act 1986 (IA 1986), brought by an insolvency office-holder. For more detail on claims under IA 1986, ss 212–214, 246ZA and 246ZB in general, refer to the following Practice Notes: Misfeasance claims under section 212 of the Insolvency Act 1986 Fraudulent trading claims under sections 213 and 246ZA of the Insolvency Act 1986 Wrongful trading claims under sections 214 and 246ZB of the Insolvency Act 1986 Step/action Time (days) Section/rule Examine the events and context that led to the company’s insolvency and the issues underpinning any claim against the respondent(s). This entails securing the company’s books and records, and interviewing current and former directors, as well as any individuals holding information about the company’s promotion, formation, business, dealings, affairs or property. Note that if the office-holder intimates a claim against the respondent(s), they may jeopardise the investigative powers under IA 1986, ss 234–236 in...

This flowchart outlines the prerequisites that need to be met to prove a misfeasance claim...

Thiel-Czerwinke and another (joint liquidators of Courtside Recycling Ltd) v Crabb [2024] EWHC 337 (Ch) What are the practical implications of this case? This ruling underlines the uncompromising obligation on directors to maintain trading records, and accepts that discarding or failing to retain them was, on these facts, a constituent part of the director’s fraudulent design. It also clarifies that once office-holders demonstrate that company assets or cash were transferred to a director, the absence of documents showing that the funds or property were applied for the company’s advantage renders the director liable to repay the whole amount to the company. That outcome applies even though the judge did not doubt that Mr Crabb did in fact use some of the cash when making payments for Courtside... What was the background? Mr Crabb served as the Company’s sole director; the business dealt in scrap metal. For the trading periods from August 2014 to February 2018, the Company submitted VAT returns declaring sales, net of VAT, totalling...

Restructuring & Insolvency weekly highlights—29 August 2024 In this issue: Corporate insolvency processes Restructuring Personal insolvency Directors and insolvency Daily and weekly news alerts Corporate Rescue and Insolvency (August 2024 edition) New Q&A Corporate insolvency processes Company’s register of members | Conclusive or not for voting rights? (Bland v Keegan) In proceedings relating to JDK Construction Ltd (JDK), the Court of Appeal examined a challenge to the lawfulness of a written resolution appointing joint liquidators, alongside allegations of an unauthorised share transfer form. The Appellant argued her shares in JDK were wrongfully transferred, rendering the liquidators’ appointment invalid. The key question was whether the company’s register of members—recording her shares as transferred—was determinative for validating the members’ resolution. Affirming the decision of His Honour Judge Hodge KC, the Court of Appeal held that the register stands as prima facie evidence of who the members are and of the validity of resolutions passed by them, unless...

In this issue: Directors and insolvency Corporate insolvency processes Insolvency litigation Daily and weekly news alerts Key dates for R&I professionals Directors and insolvency BHS directors liable for trading misfeasance in excess of £110m (Wright v Chappell; Re BHS Group Ltd). Concluding the proceedings against the former BHS leadership, the Court determined the directors were jointly and severally accountable for the uplift in the company’s net deficiency, caused by breaches of duty that kept the business trading. See News Analysis: BHS directors liable for trading misfeasance in the sum of more than £110m (Wright and others v Chappell and others; Re BHS Group Ltd), by Phillip Patterson, barrister, Gatehouse Chambers. Recovery of improper payments and unlawful dividends from directors of insolvent company (Manolete Partners v Mohammed). The court accepted, in relation to a number of payments made by the company, that creditors’ interests were triggered at an early point; the entity’s apparent solvency depended on including...

Index of Restructuring & Insolvency flowcharts This Practice Note provides pathways to Flowcharts within Lexis+® UK Restructuring & Insolvency, focused on insolvency disputes, with additional subjects to follow progressively. Each Flowchart also signposts pertinent Overviews, Practice Notes, Checklists, Precedents, News Analysis, with supplementary materials for study. Insolvency litigation Misfeasance claims under section 212 of the Insolvency Act 1986—flowchart ...

This glossary sets out numerous expressions frequently encountered in the restructuring arena. Words appearing in the definitions in bold are explained in other entries in this glossary. For further banking terminology, see the principal Banking & Finance Glossary. Restructuring glossary—A Acceleration: Acceleration means the agent, acting on directions from the majority lenders after an event of default, takes formal action, for example calling for early repayment of the facility. Ad-hoc committee: A temporary creditors’ group (often contrasted with a formal committee) that lacks any entitlement to official recognition. Administration: A process under the IA 1986 in which a financially distressed company is operated by an administrator as a going concern before longer-term outcomes, such as break-up and sale, are pursued. Administrator: An Insolvency Practitioner named by the court, a Qualifying floating charge holder, the directors or the company, to take control and fulfil one of the purposes in IA 1986, Sch B1. Administrative receivership: Arises when a company breaches the terms of...

Under the Insolvency Act 1986 (IA 1986), an administration—often called the administration term or the administrator’s tenure—ends automatically after 12 months unless a valid extension is obtained, irrespective of the route by which the administrator was appointed. For more detail, see Practice Note: How an administration comes to an end—Automatic end. Once that period expires, former administrators lose authority to use any powers granted by the IA 1986. If they act on the mistaken basis that their appointment continues, they may face personal exposure, including claims for trespass or interference with the company’s property and proceedings for breach of duty/misfeasance. Where additional time is needed, administrators must apply for an extension and present proper grounds—commonly that unresolved administration matters remain, for example the need for further time to realise assets. How and when can an administrator seek to extend their term?...

INSOLVENCY ACT APPLICATION NOTICE Use with an application notice complying with Insolvency (England and Wales) Rules 2016, SI 2016/1024—see Form IAA (IR 2016, r1.35 VAR) and corporate insolvency application notice. Case No: [insert]. Court: High Court (Business and Property Courts—Insolvency and Companies List (ChD)) or County Court at [insert]. Between [Applicant(s)] and [Respondent(s)]. Matter: [company] and the Insolvency Act 1986. Under s212 Insolvency Act 1986. Applicant(s): [names/addresses]. Respondent(s): [names/addresses]. Heard by [judge level] at [court/hearing centre]. Within existing proceedings? YES/NO. Court ref: [insert]. Declaration that Respondent(s) breached fiduciary/trust/statutory duties by causing or permitting the Company to [details]. Order that Respondent(s) [jointly and severally] account to Applicant(s) (liquidator(s)) for [sum], or as the Court thinks fit. Alternatively, equitable compensation/damages of [sum], or as the Court decides. Interest in equity or under s35A Senior Courts Act 1981 at rate and period the Court thinks fit. Costs of and incidental to this application. Further or other relief as the Court thinks fit....

CASE NO: [ insert case number ] [ Sitting at the High Court of Justice, Business and Property Courts of England and Wales, Insolvency and Companies List (ChD), or at the High Court of Justice, Business and Property Courts in [ insert location ], Insolvency and Companies List (ChD), or at the County Court at [ insert location ], Business and Property work ] BEFORE [ [DEPUTY] INSOLVENCY AND COMPANIES COURT JUDGE............................. / THE HONOURABLE [MR/MRS] JUSTICE.......................... / [DEPUTY] DISTRICT JUDGE............................. / [HIS/HER] HONOUR JUDGE.......................... ] DATED [ insert date ] IN THE MATTER OF [ insert company’s...

Applicant(s): [ insert initials and surname ] [ insert witness statement number eg 1st ] Exhibit: [ insert exhibit description ] Date: [ insert date of witness statement ] CASE NO: [ insert case number ] [ IN THE HIGH COURT OF JUSTICE BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES INSOLVENCY AND COMPANIES LIST (ChD) OR IN THE HIGH COURT OF JUSTICE BUSINESS AND PROPERTY COURTS IN [ insert location ] INSOLVENCY AND COMPANIES LIST (ChD) OR IN THE COUNTY COURT AT [ insert location ] BUSINESS AND PROPERTY WORK ] IN THE MATTER OF [ insert company’s name ] AND IN THE MATTER OF THE INSOLVENCY ACT 1986 BETWEEN [ Insert name(s) of the Applicant(s) ] Applicant(s) AND [ Insert name(s) of the Respondent(s) ] Respondent(s) [ INSERT NUMBER ] Witness statement of [ Insert name OF OFFICE-HOLDER ] I, [ insert name of the office-holder ] of [ insert the office-holder's business address ] WILL STATE as follows: General ...