Have a question?
033 3772 0409

Civil Litigation Solicitors

Director’s duties continue after administration and liquidation (4 February 2020)

Date: 04/02/2020
Duncan Lewis, Civil Litigation Solicitors, Director’s duties continue after administration and liquidation

Directors often believe that once a company is placed into administration or liquidation and an administrator or liquidator is appointed, they become absolved of any of their duties. That is a fallacy, as the duties continue during administration and liquidation as the Respondent found out in the recent case of Stephen John Hunt (as liquidator of Systems Building Services Group Limited) (1), Systems Building Services Group Limited-in Liquidation (2) v Mr Brian Michie(1) and Systems Building Services Limited (2) [2020] EWHC 54 (Ch).

What happened in the case?

Systems Building Services Limited’s (“SBSL”) principal activity was selling ‘passive fire protection, fire stopping and intumescent coating’. It was incorporated on 10 August 2000 and the first Respondent was appointed as a director on same day.

In July 2012, SBSL was placed into administration and Ms Sharma was appointed as an administrator. A year later, SBSL entered into a creditor’s voluntary liquidation (CVL), with Ms Sharma appointed as a liquidator. SBSL was dissolved on 24 February 2016.

Mr Hunt was appointed as a liquidator following a block transfer order in respect of 44 insolvency cases handled by Ms Sharma. Mr Hunt conducted an investigation into certain transactions carried out whilst Ms Sharma was an administrator and thereafter liquidator of SBSL and brought the following claims against the first Respondent:


  1. Breach of fiduciary duties in relation to his purchase of a property belonging to SBSL at a price he knew to be a substantial undervalue from the liquidator of SBSL.

  2. Payments made to a third party shortly after SBSL’s entry into administration.

  3. Payments by SBSL to the first Respondent from 22 July 2020 to 10 July 2012, prior to SBSL administration.


There was also another head of claim against the second Respondent.

Counsel for the Respondents argued that once SBSL entered into administration or CVL the duties owed by the first Respondent under the Companies Act 2006 (“CA 2006”) only continued as long as the first Respondent is exercising the powers of a director, in the capacity of a director and under powers preserved or permitted by the Insolvency Act 1986.

In finding in favour of the Applicants in respect of all the heads of claim, the Judge held that the general duties of a director of a company to the company set out in ss171 to 177 CA 2006 survive the company’s entry into administration and CVL.

Commentary from Litigation Director Anthony Okumah:

This judgment has been held to be a landmark decision in respect of the survivability of a director’s duties post administration and in a CVL. It is also noteworthy to point out its applicability to pre pack sale arrangements especially where the sale is to a connected director or entity. Office holders and directors of a company contemplating administration or CVL must pay heed to this judgement and ensure they obtain advice on any transaction that they may be held to account for.

For more information on director’s duties continuing after administration and liquidation please contact Anthony directly by calling 020 3114 1227 or emailing anthonyo@duncanlewis.com.



For all Civil Litigation related matter contact us now.Contact Us

Call us now on 033 3772 0409 or click here to send online enquiry.
Offices Outside London
Duncan Lewis is the trading name of Duncan Lewis (Solicitors) Limited. Registered Office is Spencer House, 29 Grove Hill Road, Harrow, HA1 3BN. Company Reg. No. 3718422. VAT Reg. No. 718729013. A list of the company's Directors is displayed at the registered offices address. Authorised and Regulated by the Solicitors Regulation Authority . Offices all across London and in major cities in the UK. ©Duncan Lewis >>Legal Disclaimer, Copyright & Privacy Policy. Duncan Lewis do not accept service by email.