LEXLAW Solicitors & Barristers
In a significant July 2026 ruling, the Supreme Court has confirmed that a director’s duty to act in good faith under section 172 of the Companies Act contains an objective element. A director who covertly pursues his own preferred outcome while misleading the board breaches his fiduciary duty, even where his motives are sincere.
When a company enters liquidation, the liquidator investigates the conduct of its directors and can pursue personal claims for misfeasance, wrongful or fraudulent trading, preferences, transactions at an undervalue and transactions defrauding creditors. This succinct guide explains each claim and, crucially, how a director can defend it.
Directors who continue trading after they knew, or ought to have concluded, that there was no reasonable prospect of avoiding insolvent liquidation or administration may face personal liability under section 214 of the Insolvency Act 1986. During the period in which a company is insolvent or nearing insolvency, directors’ decisions may also come under closer scrutiny, particularly where losses to creditors increase.
Growing scrutiny of regulatory oversight has reignited claims that small businesses were exposed to hidden liabilities through complex lending structures, raising significant legal questions around misrepresentation, regulatory accountability, and SME redress.
Sections 235 and 236 of the Insolvency Act 1986 impose powerful duties on company directors, officers, employees, and even third parties to co-operate with insolvency office-holders such as liquidators and administrators. Failure to assist properly during liquidation, administration, or bankruptcy can result in personal sanctions, court orders, fines, and even director disqualification.
The Proceeds of Crime Act 2002 gives UK authorities wide powers to freeze and recover assets without a criminal conviction. This guide explains how POCA affects directors and businesses, common enforcement tools, legal defences, and steps to protect corporate and personal assets.
Personal Liability Notices (PLNs) are a powerful HMRC enforcement mechanism that can make company directors and officers personally liable for unpaid corporate tax debts, including PAYE, National Insurance Contributions, VAT, and CIS. In 2026, PLNs are increasingly used in insolvency and enforcement scenarios, placing directors’ personal assets and professional futures at direct risk.
This detailed guide explains the impact of compulsory liquidation. Early engagement with specialist insolvency and tax counsel is the most critical factor in minimising director exposure and defending or managing the process effectively. Our specialist solicitors and barristers are available to assist on a discounted fixed fee arrangement.
The High Court ordered the former directors of Evershine Travel Limited (In Liquidation) to repay more than £1.4 million after treating company funds as their own and authorising unlawful dividends while the company faced a £17.58 million deficit to creditors. The case highlights the severe consequences for directors who breach duties owed under the Companies Act 2006 once a company approaches insolvency.
The High Court ordered Mr Steven Bell to repay substantial sums after causing BSS LED [R&D] Limited to enter into transactions at an undervalue and make preferential payments to connected companies, in breach of directors’ duties under the Companies Act 2006 and the Insolvency Act 1986.