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BTI 2014 LLC v Sequana and Others (2019)

This recent case examined when directors must have regard to creditors rather than shareholders in taking decisions that affect the company.

In this case, the court considered whether the directors should have considered creditors’ need when paying dividends. Even with a real risk of insolvency, the court decided that directors had to act in creditors’ interests in performing their duties. Creditors’ interests become paramount when the directors know or ought to know that the company is either insolvent, or there is no prospect of avoiding insolvency.

The court said that in the case of Sequana, this duty to creditors had not arisen, as the company was not insolvent, or likely to become as such.

This case was discussed in more detail in our recent CPD Tap webcast 

Posted: 18.06.2019
Tags:  newsletter

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