Misfeasance Claims Case Studies – What you need to know

Navigate Business Recovery are specialists in defending directors against various claims made by insolvency practitioners. Misfeasance claims are often made when liquidators claim that the conduct of a director has caused breach of his statutory duties owed to the company and its creditors.

Here we take a look at a couple of our misfeasance case studies, showing how we advised our clients: 

Case Study 1

A recent client we dealt with, the director was facing a misfeasance claim from a liquidator who had claimed that the director had arranged for preference payments totalling £54,000 to be made. The liquidator stated that the director had allowed loan repayments to be made to him and his wife before the company went into compulsory liquidation.

In this particular case although there seemed to be a defence based on the facts provided, the director did not have all documentation required in order to confirm his explanations to us. As a result, we took a commercial approach and advised the director to offer a reduced sum to the liquidator. This avoided the consequences and costs of litigation and a long drawn out court case.

The director agreed and we mediated to agree a payment of around 25% of the sum claimed.

Case Study 2

We were instructed to advise a director of an unsuccessful business who received a misfeasance claim by a liquidator indicating that the amount of £275,000 was to be claimed. The liquidator was claiming that preference payments were received by the director during the period prior to liquidation, in priority to paying other creditors at that time. 

The liquidator was also claiming funds from the director in respect of an overdrawn director’s loan account. They claimed that there had been payments and other unknown transactions made to third party individuals, which estimated to be in the region of £85k resulting in the total claim being of a significant sum.  

Our Response to the Claim

We researched with the director and ascertained the position and responded to the liquidator’s solicitor. We were able to validate that the liquidator’s investigations were insufficient and spurious. The record-keeping and documentation provided showed that in fact all third party payments and other transactions were accounted for and were legal.

The liquidator was advised that the director did not have funds totalling £360,000 to pay. A meeting was held with the liquidator and his solicitor and a reasonably amicable settlement was reached. Another success of saving High Court action.

The Settlement  

The director was given a period of one year from the date of settlement to re-mortgage or try and sell his residential property which he could then make a payment from. Whilst the director was in the process of trying to raise funds, the liquidator secured his position and took a voluntary charge over the property.   

It is evident that the earlier you make contact with Navigate Business Recovery, the more likely we can provide help and assistance.

Next Step

If you want to find out anything further about this subject then please feel free to call me on 01494 786000 or 07961 116321. All conversations will be in strict confidence. You can also email me vee@navigatebr.com

DISCLAIMER This blog / article is for information and interest only. It is not a substitute for full professional advice, which will take account of the specific and individual circumstances surrounding your matter. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.

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T: 01494 786000 - M: 07961 116321