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Wrongful Trading and Misfeasance Claims by the Liquidator against Director – Successfully reducing the amount even where the Defence position was weak

Suky Mann achieved a £60,000 reduction for our client and an extended time to pay period.

The company was hopelessly insolvent long before the word liquidation was even muttered.  It had been that way almost from the commencement of trade. It was thus hardly surprising that shortly after his appointment, the Liquidator issued a letter before action against the sole Director of the company. This testimonial tells how Suky Mann negotiated a favourable settlement in this insolvency and misfeasance claims case.

The details of this case

Against the background where the deficiency to creditors was just over £270,000, the Liquidator was pursuing a multitude of claims against the Director to include Wrongful Trading and Misfeasance totalling in excess of £100,000. The client’s initial approach was to revert to the company Accountant for help in dealing with the claims. Frankly this strategy made matters worse.

With limited knowledge of the law and with no experience in dealing with Liquidator claims, the Accountant put forward arguments to the Liquidator that served only to increase the sums that were being claimed, with various admissions being made along the way on the Director’s behalf.  A bad situation becoming worse…

With the threat of Court proceedings being issued by the Liquidator, the Director sought the help of NDP’s Senior Solicitor, Suky Mann. With pre-issue costs and interest, the total claim, for wrongful trading and misfeasance was nearer to £130,000, Suky immediately got to work unravelling the claims that alleged the Director caused the company to trade whilst it was insolvent.

Suky recommended a strategy focused on negotiating a settlement

It became immediately apparent to Suky there would be problems in advancing successful defences to the proposed claims.

Suky advised the client that the best outcome he could achieve was to negotiate a settlement on favourable terms.  The strategy agreed with the Director was to do the deal, minimise costs and exposure, rather than pursue an impossible defence.

Suky was able to secure a much-reduced settlement of £70,000 payable over an extended period of time to meet the Director’s ability to raise the £70,000 settlement sum. Most importantly for our client, Suky achieved the client’s ultimate objective of ‘getting out’ as quickly as possible whilst protecting his significant unencumbered assets.

Our Comment

The strict legal position is only ever one component in a settlement negotiation, alongside (for example) the Liquidator’s financial ambitions and the ability of the Director to actually pay.

The client was delighted with the outcome, telling us:

“No one likes paying out when you think you’ve done nothing wrong, but I’m grateful to Suky that she was so upfront and telling me that the reality of what I was facing and that I was on a hiding to nothing.

She made it clear to me that our approach in dealing with the claims should be one of damage limitation as opposed to outright denials. Suky did a fantastic job for me and settled on a figure that was acceptable to me, and saved me from a lot of stress. I would not hesitate to recommend her to anyone in the same situation.”

If this case proves nothing else, it demonstrates that importance of having the right people in your corner, even when the situation looks desperate. In our experience, it’s never too late to seek legal advice and achieve the best possible outcome.

Contact us for a FREE, confidential and no obligation initial chat. 0121 200 7040.