Many businesses now face financial challenges because of the COVID-19 pandemic. The immediate concern for many is survival and the impact of COVID-19 on their cashflow and the ability to service loans.
The financial state of a company directly affects the duties and liabilities of company directors. Where concerns over a company’s financial health increases, directors have a fiduciary duty to consider creditors’ interests when making decisions. And where there is imminent threat of insolvency, certain acts by directors may make them personally liable for the company’s debt. These are pertinent issues to be mindful of during these uncertain times.
This article discusses:
- The duty of directors to consider creditors’ interests
- Directors’ personal liability from giving undue preferences
- Liability arising from wrongful trading
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