HomeFWJ TakeawayWhat sort of transactions can be subject to misfeasance claims?

Any misconduct by a director which leads to a loss to the company or its creditors as a whole can form the basis of a claim for misfeasance against that director personally. The claim is one which lies with the company and is brought by its appointed liquidator.

For example, paying a creditor off in priority to other creditors (commonly referred to as a “preference claim”) or selling assets to associated parties for less than their market value or even giving them away (commonly referred to as a “transaction at an undervalue”) can lead to claims against both the receiving parties under the Insolvency Act 1986 and against directors for misfeasance.

In addition directors can be liable for misfeasance where they conceal or remove company assets or do business on behalf of the company which causes losses to third parties (e.g. creditors).

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