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Misfeasance

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Section 212 of the Insolvency Act 1986 (IA 1986) explains the concept of misfeasance which encompasses: The misapplication or retention of money or other property of the company; Becoming accountable for money or other property of the company; Breaching a fiduciary or other duty in relation to the company; Otherwise being “guilty of misfeasance”. As you can see from the above, misfeasance covers a broad range of aspects in relation to a director’s conduct during his/her tenure. In recent years our lawyers have experienced an increase of claims of this nature due to the wide ambit of misfeasance.

When (why) would a Director need this service?

Directors/company officers are more likely than ever to face a claim for misfeasance in relation to their former company which has since gone into liquidation or administration.

The underlying purpose of a misfeasance claim is for the Liquidator/Administrator to seek to recover sums owed to creditors of the company as well as to attempt to recover their own professional fees. This is usually done by seeking a court order for the director/company officer to repay, restore, or account for any misappropriated money or property, or to compensate the company for breach of fiduciary duty.

Who can bring a claim for misfeasance?

In most cases it will be the appointed Liquidator who will seek to bring a claim for misfeasance against a director/company officer on behalf of the company. However, there are others who can bring a claim for misfeasance, including:

  • Administrators (normally pursued under paragraph 75 of Schedule B1 of IA 1986 rather than section 212 of IA 1986);
  • A creditor of the company;
  • A contributory to the company’s capital;
  • The Official Receiver.

Can I challenge a claim for misfeasance?

You may be able to challenge a claim for misfeasance against you, however each case is dependent on its own merits.  The challenges to a misfeasance claim can be very technical and therefore a specialist lawyer is required to consider the specific details of the allegations.  However, we have been able to compile a list of possible challenges is set out below:

  • Where it can be shown that shareholder assent renders the alleged misfeasance an act of the company itself thereby precluding action by the company against the director (the “common law” defence);
  • Where the director or company officer acted honestly and reasonably having regard to all the circumstances of the case pursuant to Section 1157 of the Companies Act 2006 (the “statutory” defence);
  • There has not been a genuine loss to the company and the proposed claim would result in the company being overcompensated;
  • The person bringing the claim is time barred from doing so. The time limit for bringing a claim is six years beginning on the date that the misfeasance or breach of duty complained of occurred; and
  • There has been a procedural or technical error in respect of the allegations of misfeasance.

If a director/company officer wishes to consider his/her options in relation to challenging any potential actionlegal advice should be sought at an early stage and preferably even as early as when the director is dealing with the Liquidator or Administrator, by completing questionnaires or attending interviews. 

What should people do before calling

If you are contacted by the Liquidator or Administrator, you should explain that you wish to seek legal advice before reverting to them. You should get in touch with us immediately thereafter.

Is it expensive? What are the likely costs?

 We will provide you with an estimate of costs at the outset based on the type of work required.

 Our lawyers have extensive experience in advising clients who are faced with misfeasance claims and have successfully defended clients who were subjected to such proceedings. Our lawyers will be able to provide you with bespoke and cost effective advice tailored to your circumstances.

Meet the Misfeasance team
Ray Crudgington
Managing Partner
greenwich
02083054224
ray.crudgington@grantsaw.co.uk
Maria Lati
Partner
Head of Residential Property
blackheath
02083054229
maria.lati@grantsaw.co.uk
Michael Clary
Partner
Head of Family
greenwich
02083054237
michael.clary@grantsaw.co.uk
Kalpa Prajapati
Partner
Head of Private Client
blackheath
02083053536
kalpa.prajapati@grantsaw.co.uk
Mario Savvides
Partner
Head of Commercial Property
greenwich
02083053531
mario.savvides@grantsaw.co.uk
Sarah-Kate Jackson
Partner
Head of Litigation
greenwich
02083054236
sarah-kate.jackson@grantsaw.co.uk
Adina-Leigh Collins
Litigation
Solicitor
greenwich
02083053556
adina-leigh.collins@grantsaw.co.uk
Aimal Gram
Commercial Property
Solicitor
greenwich
02083053524
aimal.gram@grantsaw.co.uk
Aisha Mohammed
Residential Property
Solicitor
greenwich
02083054228
aisha.mohammed@grantsaw.co.uk
Aishat Balogun
Aishat Balogun
Family
Solicitor
greenwich
02083054214
aishat.balogun@grantsaw.co.uk
An Le Tran
Commercial Property
Professional Support Solicitor
greenwich
02083054226
anle.tran@grantsaw.co.uk
Angus Young
Litigation
Solicitor
greenwich
02083054225
angus.young@grantsaw.co.uk
Atifha Aftab
Atifha Aftab
Family
Solicitor
greenwich
02083054238
atifha.aftab@grantsaw.co.uk
Bimal Kotecha
Litigation
Solicitor
greenwich
02083053523
bimal.kotecha@grantsaw.co.uk
Charlotte Mandy
Charlotte Mandy
Private Client
Solicitor
blackheath
02083054231
charlotte.mandy@grantsaw.co.uk
Claire Mac Mahon
Litigation
Solicitor
greenwich
02083053537
claire.macmahon@grantsaw.co.uk
Deborah Taite
Residential Property
Solicitor
blackheath
02083053542
deborah.taite@grantsaw.co.uk
Emily Pearce
Residential Property
Solicitor
greenwich
02083053526
emily.pearce@grantsaw.co.uk
Georgia Beales
Litigation
Paralegal
greenwich
02083054206
georgia.beales@grantsaw.co.uk
James McKimm
James McKimm
Corporate and Commercial
Solicitor
greenwich
02083054217
james.mckimm@grantsaw.co.uk
Jeremy Brooks
Jeremy Brooks
Private Client
Solicitor
blackheath
02083053534
jeremy.brooks@grantsaw.co.uk
Joanna Godden
Notary Public
Notary
greenwich
02083083535
joanna.godden@grantsaw.co.uk
Kim Whitaker
Kim Whitaker
Corporate and Commercial
Head of Corporate and Commercial
greenwich
02083053539
kim.whitaker@grantsaw.co.uk
Laura Danquah
Compliance Manager
greenwich
02083054222
laura.danquah@grantsaw.co.uk
Lauren Smith
Employment and Family
Paralegal
greenwich
02083053543
lauren.smith@grantsaw.co.uk
Maleeha Iqbal
Residential Property
Licensed Conveyancer
greenwich
02083054232
maleeha.iqbal@grantsaw.co.uk
Mandeep Clair
Family
Solicitor
greenwich
02083054235
mandeep.clair@grantsaw.co.uk
Michael Pope
Employment
Consultant Solicitor
greenwich
02083053540
michael.pope@grantsaw.co.uk
Michelle Pinnington
Michelle Pinnington
Residential Property
Solicitor
greenwich
02083054216
michelle.pinnington@grantsaw.co.uk
Raj Waghela
Raj Waghela
Residential Property
Solicitor
greenwich
02083053529
raj.waghela@grantsaw.co.uk
Randeep Thethy
Randeep Thethy
Residential Property
Solicitor
greenwich
02083054209
randeep.thethy@grantsaw.co.uk
Ruggero Pesciatini
Ruggero Pesciatini
Corporate and Commercial
Paralegal
greenwich
02083054220
ruggero.pesciatini@grantsaw.co.uk
Saad Hameed
Residential Property
Trainee Solicitor
greenwich
02083053528
saad.hameed@grantsaw.co.uk
Sarah Conner
Sarah Conner
Private Client
Solicitor
blackheath
02083054234
sarah.conner@grantsaw.co.uk
Simran Lalli
Simran Lalli
Employment
Solicitor
greenwich
02083054208
simran.lalli@grantsaw.co.uk
Susan Collins
Commercial Property
Solicitor
greenwich
02083054200
susan.collins@grantsaw.co.uk
Tatiana Zenina
Tatiana Zenina
Private Client
Solicitor
blackheath
02083054239
tatiana.zenina@grantsaw.co.uk
Trisha Djemal
Trisha Djemal
Residential Property
Consultant Solicitor
blackheath
02083053546
trisha.djemal@grantsaw.co.uk
Tyrone Grant
Residential Property
Head of Leasehold Enfranchisement
blackheath
02083053522
tyrone.grant@grantsaw.co.uk
Denise
Accounts Staff
greenwich
02088586971
enquiries@grantsaw.co.uk
Jayne Lye
Support Staff
Office Manager
greenwich
02083054204
jayne.lye@grantsaw.co.uk
Jamie
Support Staff
Head of IT
greenwich
02088586971
enquiries@grantsaw.co.uk
Kasia
Accounts Staff
greenwich
02088586971
enquiries@grantsaw.co.uk
Michael Tobin
Michael Tobin
Support Staff
Marketing and Business Development Manager
greenwich
02083053550
michael.tobin@grantsaw.co.uk
Sue Holness
Support Staff
Customer Services
greenwich
02083054221
sue.holness@grantsaw.co.uk