Company Directors' Responsibilities to Creditors »

Comprehensively examining directors' responsibilities to creditors in times of financial strife, this volume, international in scope, analyzes and compares relevant UK legislation and case law with that from Australia, Canada, Ireland and the US.

Preface     xi
Table of cases     xv
Table of legislation     xxiii
Table of statutory instruments     xxv
Table of international legislation     xxvii
Introduction     1
Background to directors' responsibilities     3
Introduction     3
Directors - who are they?     4
Responsibilities and obligations     8
The lay-out of the book     12
Creditors - who are they?     13
Who is a creditor?     13
Kinds of creditors     15
Consensual creditors     15
Involuntary creditors     18
Customers     18
Creditor protection     18
Summary     21
Fraudulent trading     23
Fraudulent trading: background, aims and comparisons     25
Introduction     25
Background     25
Aims     27
Comparisons     28
The fraudulent trading provision and its scope     31
Introduction     31
The make-up of section 213     32
The applicant     33
Persons liable     34
Applications     37
Criminal proceedings     39
Conditions for liability     40
What constitutes fraudulent trading?     45
Loss     45
The order     46
The destination of proceeds     48
Intent to defraud and fraudulent purpose     51
Introduction     51
Intent to defraud     52
Fraudulent purpose     62
Conclusion     63
Fraudulent trading: an assessment     65
Introduction     65
Actions available before liquidation?     65
Other applicants?     66
The public element     67
Interpretation of the provision     69
Substituting the incurring of debts for fraudulent trading?     69
Conclusion     70
Wrongful trading     71
Wrongful trading: background, aims, rationale and comparisons     73
Introduction     73
Background     74
Aims     75
Rationale     77
Comparisons     78
The wrongful trading provision and its scope     81
Introduction     81
The applicant     81
Claims      83
The elements required for liability     86
The point of liability     93
What should directors be doing?     94
Court considerations     96
The types of companies involved in actions     99
Loss     100
The order     101
The effects of an order     104
The public factor     109
A defence to wrongful trading     111
Introduction     111
The substance of the defence     111
Every step: meaning     112
Relief from liability     121
An assessment of wrongful trading: pros, problems and prognoses     125
Introduction     125
Applicants     125
The point of liability     128
Wrongdoing     129
Every step - the defence     130
Funding     131
The public factor     136
An assessment     137
Reforms     147
Conclusion     149
A duty to consider the interests of creditors     151
The development of the duty to consider the interests of creditors     153
Introduction     153
The evolution of the duty      155
Recent judicial opinion in the UK     161
Approaches in other jurisdictions     162
The duty considered in the course of law reform in the UK     173
Conclusion     176
The duty to creditors: nature, rationale and need     179
Introduction     179
The nature of the duty     179
The rationale for the duty     181
Is the duty needed?     184
Disadvantages of bringing proceedings for breach of duty to creditors     194
Uses for breach of duty actions     196
Conclusion     197
When does the duty arise?     199
Introduction     199
The point when the duty arises     199
An assessment     208
Conclusion     220
How are the directors to function when subject to a duty to creditors?     221
Introduction     221
In what ways are directors to function?     222
The balancing of interests     225
Governance in Chapter 11 bankruptcy     238
A framework     241
Dissension at board level     250
Conclusion     251
A direct duty to creditors?     253
Introduction      253
The problems with a direct duty     254
The legal position     258
Should there be an independent duty?     264
Conclusion     266
Commencement of proceedings     269
Introduction     269
Shareholders and creditors     270
Misfeasance proceedings     271
Class actions     272
Derivative actions     273
Oppression and/or unfair prejudice remedy     276
Why might some creditors not want to pursue proceedings?     279
Conclusion     279
Are all creditors to be favoured?     281
Introduction     281
The issues     281
The case law     284
Conclusion     286
Theoretical analysis     287
Introduction to the theoretical analysis     289
A theoretical analysis of the duty to consider creditors     293
Introduction     293
The contractarian paradigm and the law and economics movement     293
Progressive scholarship     300
Distributional fairness     302
Efficiency     309
Creditor protection - is it warranted?     319
Types of creditors      332
Creditors have no right to initiate proceedings     336
Commercial morality     337
The creditors as residual claimants     338
Conclusion     340
A theoretical analysis of wrongful trading     343
Introduction     343
Opposition to regulation     343
Support for regulation     359
Conclusion     367
Directors' responsibilities and opting out     369
Introduction     369
Mandatory and enabling (default) rules     370
Fraudulent trading     374
Wrongful trading     375
Duty to consider the interests of creditors     379
Conclusion     380
Conclusions and reflections     383
Index     387