Directors’ Duties Towards Creditors: Clarification by the Supreme Court

27th February 2023

3PB Barristers’ (3 Paper Buildings) specialist commercial law barrister Makhsudul IslamMakhsudul IslamCall: 2013 (pictured here) explores the case of BTI 2014 LLC v Sequana SA & Others, a recent dispute involving the defining of directors’ duties towards creditors and stakeholders in the event of likely insolvency.

The case in question relates to the point at which the “success duty” becomes the duty of company directors to give preference to creditors upon likely insolvency, in relation to a £119m dividend paid by Arjo Wiggins Appleton Ltd to singular stakeholder Sequana SA in May 2009. Upon insolvency in 2018, AWA’s assignee BTI brought legal action against the company’s directors for failing to act according to “the success duty” of the Companies Act 2006. At the same time, AWA’s main creditor brought action against Sequana to recover the dividend under section 423 of the Insolvency Act 1986.

In the feature, Makhsudul reviews the case as it passed through the High Court, Court of Appeal and finally the Supreme Court and offers commentary on how the Supreme Court judgment sets a precedent for future cases.

To read Makhsudul's full analysis, please click here

Makhsudul IslamMakhsudul IslamCall: 2013 is a specialist, commercial barrister whose practice includes business-to-business disputes, supply of goods and services, enforcement of personal guarantees and insolvency

To contact or instruct Makhsudul, please contact David Fielder or Sam Collins, or telephone 0121 289 4333.