Directors liable for unlawful company payments (Re TMG Brokers Ltd (in liquidation)

Article summary

Restructuring & Insolvency analysis: TMG Brokers Ltd, acting by its liquidators, together with the liquidators as office-holders, sought declarations and consequential relief against the first and second respondent directors of the company who were said to be accountable for monies paid to or for their benefit by the company rather than for the benefit of the company. In the case of certain payments, relief was sought on the basis that the payments were ultra vires, disguised distributions of capital, or that in causing or permitting them the respondents had acted in breach of their fiduciary duties as directors. In the case of other payments, the claim was on the basis only of breach of fiduciary duties. The case provides a useful summary of the law, although the directors were unrepresented and appear to have raised little by way of real argument. Written by Frances Coulson, partner, at Moon Beever LLP.