ABSTRACT
Directors of companies occupy important and critical roles in the lives and affairs of their companies. In fulfilling this function, multifarious responsibilities are imposed on directors. It is not intended to discuss the work and roles of directors, as this is accomplished in many standard texts; what this book seeks to do is to examine a specific aspect of the role of directors, namely their responsibilities to the creditors of their companies. We might talk, in a loose sense, of duties to creditors, but the word, ‘duty’ is, as Professor Len Sealy has pointed out, a slippery word.1 It is trite law that directors owe duties to their companies as a whole, and these include duties that are known as ‘fiduciary duties’. These are duties of loyalty and good faith (Bristol and West Building Society v Mothew [1998] 1 Ch 1; [1996] 4 All ER 698, CA), and they are not generally owed to any individual members of the company, or other persons, and this includes creditors (Percival v Wright [1902] 2 Ch 421; Multinational Gas and Petrochemical Co v Multinational Gas and Petrochemical Services Ltd [1983] Ch 258; Peskin v Anderson [2000] BCC 1110 (and affirmed on appeal by the Court of Appeal [2001] BCC 874)).2 The legislature has provided that directors must do certain things during their tenure, and some of these obligations can, in general terms, be regarded as being owed to creditors, either directly or indirectly. I will mention some of these shortly, but it is important at this point to state that the focus of the book is on legislation and case law that has imposed responsibilities on directors as far as creditors of their companies are concerned. The responsibilities that we are talking about are not precise, and, as a consequence, the case law that has developed tends
to be indefinite in many aspects, causing uncertainty. The lack of certainty and precision are at the forefront of the issues that we will consider during the course of the book. Besides assessing the positive law on the responsibilities, the book also considers them from a normative perspective and asks whether directors should in fact be subject to such responsibilities.
