Simon Duncan concludes his series of articles on the right to sue former directors
Section 217 of the Insolvency Act 1986 (IA 1986) and s 15 of the Company Directors Disqualification Act 1986 (CDDA 1986) are derived from the same source and aimed at the same mischief. That is to say, these sections make delinquent directors co-debtors with the company for the company’s debts. In doing this, these sections strengthen creditors’ rights of redress. They allow creditors to act when the evidence suggests that a “phoenix” company has resumed the failed company’s business improperly, or when creditors have lost money in the liquidation of a company run by a disqualified director.
Re Prestige Grindings Ltd
Although the Acts themselves are silent as to who may bring a claim pursuant to these sections, the case law makes it clear that it is the creditors that have the requisite standing (see “The creditors’ claims” 162 NLJ 7530, p 1175 and Re Prestige Grindings Ltd [2006] BCC 421; [2005] EWHC 3076).
Prestige Grinding Ltd entered creditors’ voluntary liquidation on 6 February 2004. Mrs
