UK: England and Wales: the creditors' interests duty

A couple of days ago the the Court of Appeal gave judgment in BTI 2014 LLC v Sequana S.A. & Ors [2019] EWCA Civ 112. The judgment, a summary of which has been provided here by the ICLR, is one of the leading authorities on directors' duties (in particular section 172 of the Companies Act 2006 and the common law duty requiring directors to consider, in certain circumstances, the interests of creditors (sometimes called the creditors' interests duty). Lord Justice David Richards stated (at paras. [195], [215] and [216]):

There is no decision in any English authority which is clearly based on the proposition that the creditors' interests duty is triggered by anything short of actual insolvency. In all the cases, the company was insolvent, as the directors knew or ought to have known, and in few (if any) cases does this seem to have been the subject of argument. Nonetheless, the number of times that judges, many of them with considerable experience in this field, have assumed that something less than actual insolvency will trigger the duty carries weight.

... the test of a real, as opposed to a remote, risk of insolvency is not part of the present law as regards the creditors' interests duty, and it would not be appropriate, in the light of the policy considerations and other provisions of the Companies Act to which I have referred, for the courts to introduce such a test as a development of the common law.

I have, however, concluded that the duty may be triggered when a company's circumstances fall short of actual, established insolvency. This is certainly the view taken by many judges in the cases to which I have referred. However, for good reason, not least because it has rarely been necessary, judges have shied away from a single form of words, preferring instead a variety of expressions...".