HomeFWJ TakeawayWho can bring a misfeasance claim?

Misfeasance claims are generally brought by liquidators.  They are only available where the company has been placed into liquidation and such a claim does not exist where the company is placed into administration (although that does not preclude a claim for breach of fiduciary duties by the company via its appointed administrators).

However, misfeasance claims may also be brought by the Official Receiver (who is an officer of the court appointed by the Secretary of State to deal with compulsory liquidations), a creditor or a shareholder.

Misfeasance claims are occasionally brought by the Official Receiver where there may be no assets within a company to fund any legal proceedings brought by an appointed liquidator.  This is becoming more prevalent by reason of the current emphasis by government of the need for corporate transparency and accountability.

Creditors do occasionally issue such proceedings, as may a shareholder, although these are rare because any award will be made in favour of the company, and therefore payable to all creditors pari passu via the liquidation proceedings.  

However, this may be a solution where there is otherwise no opportunity to penalise a director and a creditor or shareholder is in a position to fund such litigation (the legal costs of which will be repayable to them in the event they are successful).

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