The Insolvency Service (
The
This was a so called "test case", running for a number of years, alleging duties which are not consistent with the Companies Act. Notably, there was no action brought against any of the NEDs by the expert regulators on disclosure, the
The costs of litigation of this kind are potentially significant. Where a company is insolvent and its former directors face claims or investigations which the company is no longer in a position to fund, 'Side A' D&O insurance cover (which covers directors personally) can be invaluable. Without this, directors may struggle to contest the claims and investigations. While a company may have purchased the cover prior to insolvency, following insolvency it may fall to the directors to take steps to preserve and access their cover. The policy cannot stay in the cupboard until legal fees start to rack up. Directors should consider insurance as soon as a potential issue is on the horizon, notifying insurers of actual or potential claims and seeking their consent to instruct defence counsel and incur costs, as well as providing regular updates as proceedings progress. Taking steps such as these to ensure that D&O Side A cover is available is likely to be important in circumstances where directors are unable to fund the costs of their own defence.
The
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr
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