Hunt vs Singh: the lay of the land on directors’ duties following Sequana—Solicitors Journal
Associate Jonathan Gorman has contributed an article to Solicitors Journal which explores when directors’ duties to creditors arise following the High Court decision of Hunt v Singh, which has served as the most significant authority on directors’ duties to creditors since the outcome of LLC vs Sequana in 2022.
Jonathan outlines how the judgement serves to clarify how and when creditor duty is triggered in circumstances where directors are aware of a claim that could render the company insolvent, emphasising that directors must have ‘knowledge of insolvency’. He adds that directors should therefore seek legal advice on any duty they may owe to creditors and the potential consequences.
The case highlights that insolvency at the relevant time is insufficient to trigger a duty to creditors and it will be necessary to establish some form of knowledge of insolvency on the part of the directors. Specifically, if a company is faced with a claim which requires a successful challenge to maintain solvency, the creditor duty arises if the directors know, or ought to know, there is a real prospect of that challenge failing.”
The article is available to view at Solicitors Journal by subscription only.
Jonathan Gorman is an associate in the restructuring and insolvency team. He advises clients in connection with both personal and corporate insolvencies, as well as in relation to issues arising in personal bankruptcies, company liquidations and administrations.
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