Defending liquidator and administrator claims

When a company enters liquidation or administration, insolvency practitioners are required to investigate its affairs and determine whether any claims should be pursued for the benefit of creditors. These investigations can result in directors, former directors, shareholders and other connected parties facing allegations of wrongdoing and demands for repayment.

Such claims can expose individuals to significant financial liability, reputational damage and, in some cases, director disqualification proceedings.

Our team advises directors, shareholders and business owners facing claims brought by liquidators and administrators. We provide clear, strategic advice from the outset, helping clients respond to insolvency practitioner enquiries, protect their position and defend claims effectively.

Have you received a letter from a liquidator or administrator?

Many clients contact us after receiving unexpected correspondence from an insolvency practitioner.

You may have:

  • Been asked to repay money received from the company
  • Been accused of wrongful trading or breach of duty
  • Received a request for company records, financial information or documents
  • Been invited to attend an interview with a liquidator or administrator
  • Been accused of misfeasance or misconduct as a director
  • Become concerned about personal liability for company debts
  • Received correspondence referring to possible director disqualification proceedings

These situations can be stressful and time-sensitive. Early legal advice can often help clarify the issues, protect your position and prevent matters escalating unnecessarily.

Facing a claim from a liquidator or administrator? Our experienced dispute resolution team can provide strategic advice to help protect your position and respond effectively.

What are liquidator and administrator claims?

Liquidators and administrators have statutory duties to investigate the affairs of insolvent companies. Where they believe losses have been caused to the company or its creditors, they may bring claims against directors, shareholders or other connected parties in an attempt to recover money or assets.

Common claims include:

Wrongful trading

Wrongful trading claims arise where directors are alleged to have continued trading when they knew, or ought to have known, that there was no reasonable prospect of avoiding insolvent liquidation or administration.

Misfeasance

Misfeasance claims involve allegations that a director has breached their duties, misapplied company assets or otherwise acted improperly in the management of the company.

Unlawful dividends

A liquidator may seek repayment of dividends paid when the company lacked sufficient distributable profits or where the payments were otherwise made unlawfully.

Fraudulent trading

Fraudulent trading claims concern allegations that business activities were carried out with the intention of defrauding creditors or for another fraudulent purpose.

Breach of fiduciary duty

Directors owe legal duties to the company. Claims may arise where directors are alleged to have acted outside their powers, placed personal interests ahead of the company’s interests or failed to exercise reasonable care and skill.

Key contact

Matthew Tossell

Partner
Matthew Tossell is currently the most senior partner in Hugh James. Having had varied responsibilities and holding several senior management positions throughout his career, he is currently responsible for a number of major partnership projects.

How can we help?

We understand that no two insolvency claims are the same. Our role is to assess the allegations, identify available defences and develop a strategy that aligns with your objectives.

Our services include:

  • Reviewing claims and pre-action correspondence
  • Advising on directors’ duties and potential liability
  • Responding to liquidator and administrator investigations
  • Assisting with requests for documents and information
  • Challenging allegations of wrongful trading or misfeasance
  • Defending breach of duty claims
  • Negotiating settlements where appropriate
  • Representing clients in court proceedings
  • Advising on related director disqualification risks and proceedings

We work closely with clients to understand the wider commercial and personal implications of a claim and seek solutions that minimise disruption wherever possible.

Why choose Hugh James?

Our dispute resolution team has extensive experience advising directors, business owners and senior individuals facing complex commercial disputes and insolvency-related claims.

Clients choose us because we offer:

  • Specialist expertise in commercial litigation and insolvency disputes
  • Strategic advice tailored to the facts of each case
  • Experience defending claims brought by liquidators and administrators
  • Practical guidance on managing director liability risks
  • Strong negotiation and dispute resolution capabilities
  • Representation in High Court and insolvency proceedings
  • Access to a full-service legal team able to advise on related corporate, regulatory and employment issues

We understand that these claims often involve significant financial, professional and reputational consequences. Our focus is on protecting our clients’ interests while working towards the most effective and commercially sensible outcome.

Frequently asked questions

Claims may be brought against current and former directors, shadow directors, de facto directors, shareholders, connected parties and others who are alleged to have received company assets or contributed to losses suffered by creditors.

Common claims include wrongful trading, misfeasance, breach of fiduciary duty, unlawful dividends, transactions at an undervalue, preferences and fraudulent trading.

A misfeasance claim is an allegation that a director or officer has breached their duties, misapplied company money or assets, or otherwise acted improperly in relation to the company’s affairs.

The defence will depend on the facts of the case. Potential arguments may include demonstrating that decisions were made reasonably, that duties were complied with, that losses were not caused by the conduct alleged, or that the claim is unsupported by evidence.

Wrongful trading occurs where directors continue trading after they knew, or should have known, that insolvency was unavoidable and fail to take appropriate steps to minimise losses to creditors.

An unlawful dividend is a dividend paid otherwise than in accordance with company law requirements, typically where there were insufficient distributable profits available at the time of payment.

Potentially, yes. Information uncovered during a liquidator’s investigation may be referred to the Insolvency Service and could result in separate director disqualification proceedings where misconduct is alleged.

Next steps

We’re here to get things moving. Drop a message to one of our experts and we’ll get straight back to you.

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