The Law and Liability of Directors and Creditors

In this recent edited volume Directors and Creditors: Law and Liability, published by Oxford University Press, the editors have assembled an established team of contributors to examine some of the most pressing challenges that face directors, creditors, and broader stakeholders, in both corporate and insolvency contexts. Set across 27 chapters, the volume offers a rigorous yet practical insight into key legal developments and their implications for practice and policy.

The challenges that are explored are set within the sphere of corporate insolvency and corporate governance, which have never been more closely linked, nor more uncertain in legal and practical terms. Directors are increasingly expected to manage competing responsibilities, not only to shareholders but also to creditors, regulators, and the broader economy. This increasing complexity is shaped by developing case law, economic instability, heightened environmental and social expectations, and the challenges of cross-border restructuring and insolvency reform. At the centre of this increasingly intricate and intertwined framework lies a fundamental tension: how directors navigate their duties and responsibilities as a company enters or approaches financial distress, and how those obligations intersect with the interests and rights of creditors and other stakeholders. The balance between entrepreneurial risk-taking and creditor protection continues to raise difficult questions, many of which remain unsettled.

The research contained in Directors and Creditors: Law and Liability is a direct response to these complexities. The first part of the book explores the evolution of corporate and insolvency governance in response to doctrinal developments and practical pressures, anchored by the landmark UK Supreme Court decision in BTI 2014 LLC v Sequana SA [2022]. The judgment, which expands across 159 pages, and a total of 451 paragraphs serves as a pivotal starting point, not only for its rulings on directors’ duties towards creditors, but also for the broader doctrinal, practical, and comparative questions it raises. Crucial issues concerning the creditor duty, including the difficulty of establishing when this duty is triggered and the specific content of the duty are all examined in this volume. The limited scope of the facts in the case restricted a comprehensive analysis of related legal issues, leaving some of these issues open to be examined in subsequent case law. Nonetheless, the legal commentary on specific points has provided some valuable judicial authority, many of which are explored in this book.

The rest of the book examines issues that are related but go beyond the legal issues and facts contained in Sequana. This includes a broader set of challenges that face directors and creditors across corporate and insolvency law. These concerns, both new and longstanding, require careful scrutiny to not only help a better understanding of these encounters but to also determine whether legal reform is required. . These issues include the extent and scope of the fiduciary duties of directors, limited liability and personal liability of directors, the challenges associated with fraudulent and wrongful trading, the implications of corporate sustainability, the conceptual challenges that face creditors, the responsibility of directors to stakeholders, and the implications associated with environmental liability and climate change litigation. Many of these issues continue to enjoy prominence in both legal literature and litigation. The analysis contained in the respective chapters strives to provide some insights that go some way to address the more contentious of matters. 

By combining insights from leading academics and experienced practitioners, the research in this book bridges legal theory and practical application. It brings together the perspectives of academics, who examine these issues from a critical and often conceptual standpoint, and practitioners, who engage with them in the everyday realities of legal and commercial practice. The editors and contributors in this work seek to clarify the current state of the law, critically examine its operation in practice, and reflect on how the legal framework ought to evolve to guide directors and protect creditors in both stable conditions and periods of financial distress.

The authors' edited volume can be found here.

John Wood is a Lecturer in Company and Commercial Law at Lancaster University.

Sofia Ellina is a Lecturer in Law at Lancaster University.

John Tribe is a Senior Lecturer at the University of Liverpool.