- Caution for liquidators and resounding success for director in breach of duty claim (Reynolds v Stanbury)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Case details
Restructuring & Insolvency analysis: An application was brought against personal stylist and influencer, Caroline Stanbury, as a director of CSB 123 Ltd (‘SC1’), under section 212 of the Insolvency Act 1986 (the ‘misfeasance’ provision). It was alleged by the liquidator of SC1 that Ms Stanbury transferred the business and assets of SC1 for no consideration in breach of her duties under sections 171 to 175 of the Companies Act 2006 (CA 2006) and that the alleged transfer constituted an unlawful distribution of capital. The application was dismissed. The judgment examines the concept of ‘personal goodwill’ and provides a comprehensive analysis of the law on breach of director duties, including what the ‘no profit’ and ‘no conflict’ rules mean in practice. The decision reviews the burden of proof test, and examines the impact of delay, loss of documentation, and non-disclosure on the assessment of evidence. Finally, there is also consideration of the operation of CA 2006, s 1157 (relief from liability), laches, and limitation in misfeasance claims. Written by Elaine Palser, barrister and mediator at Outer Temple Chambers, London.
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