Defending Liquidator And Administrator Claims

When a company enters liquidation or administration, insolvency practitioners are required to investigate its affairs and determine whether any claims should be pursued for the benefit of creditors. These investigations can result in directors, former directors, shareholders and other connected parties facing allegations of wrongdoing and demands for repayment.

Such claims can expose individuals to significant financial liability, reputational damage and, in some cases, director disqualification proceedings.

Our team advises directors, shareholders and business owners facing claims brought by liquidators and administrators. We provide clear, strategic advice from the outset, helping clients respond to insolvency practitioner enquiries, protect their position and defend claims effectively.

Have you received a letter from a liquidator or administrator?

Many clients contact us after receiving unexpected correspondence from an insolvency practitioner.

You may have:

Been asked to repay money received from the company
Been accused of wrongful trading or breach of duty
Received a request for company records, financial information or documents
Been invited to attend an interview with a liquidator or administrator
Been accused of misfeasance or misconduct as a director
Become concerned about personal liability for company debts
Received correspondence referring to possible director disqualification proceedings

These situations can be stressful and time-sensitive. Early legal advice can often help clarify the issues, protect your position and prevent matters escalating unnecessarily.

Facing a claim from a liquidator or administrator? Our experienced dispute resolution team can provide strategic advice to help protect your position and respond effectively.

What are liquidator and administrator claims?

Liquidators and administrators have statutory duties to investigate the affairs of insolvent companies. Where they believe losses have been caused to the company or its creditors, they may bring claims against directors, shareholders or other connected parties in an attempt to recover money or assets.

Common claims include:

Wrongful trading

Wrongful trading claims arise where directors are alleged to have continued trading when they knew, or ought to have known, that there was no reasonable prospect of avoiding insolvent liquidation or administration.

Misfeasance

Misfeasance claims involve allegations that a director has breached their duties, misapplied company assets or otherwise acted improperly in the management of the company.

Unlawful dividends

A liquidator may seek repayment of dividends paid when the company lacked sufficient distributable profits or where the payments were otherwise made unlawfully.

Fraudulent trading

Fraudulent trading claims concern allegations that business activities were carried out with the intention of defrauding creditors or for another fraudulent purpose.

Breach of fiduciary duty

Directors owe legal duties to the company. Claims may arise where directors are alleged to have acted outside their powers, placed personal interests ahead of the company’s interests or failed to exercise reasonable care and skill.

Who we help

Our team acts for a wide range of individuals and businesses facing insolvency-related claims, including:

Company directors
Former directors
Shadow directors
De facto directors
Shareholders
Business owners
Senior executives
Connected parties who have received payments, transfers or company assets
Individuals facing linked director disqualification investigations

Whether proceedings have already been issued or you are responding to an initial enquiry, we can provide practical advice tailored to your circumstances.

Key contact

Richard Locke

Partner

Richard is a Partner and an elected partner on the firm’s board of management. He is also Group Head of the ever expanding dispute resolution team at Hugh James. He conducts major commercial disputes frequently with an international flavour including commercial claims, mining disputes, shareholder and partnership disputes, professional negligence claims, contentious IT disputes, injunctive relief and insolvency.

How can we help?

We understand that no two insolvency claims are the same. Our role is to assess the allegations, identify available defences and develop a strategy that aligns with your objectives.

Our services include:

Reviewing claims and pre-action correspondence
Advising on directors’ duties and potential liability
Responding to liquidator and administrator investigations
Assisting with requests for documents and information
Challenging allegations of wrongful trading or misfeasance
Defending breach of duty claims
Negotiating settlements where appropriate
Representing clients in court proceedings
Advising on related director disqualification risks and proceedings

We work closely with clients to understand the wider commercial and personal implications of a claim and seek solutions that minimise disruption wherever possible.

Why choose Hugh James?

Our commercial dispute resolution team is recognised for its expertise in complex commercial litigation, holding a Band 1 ranking in Chambers and Partners and a Tier 1 ranking in The Legal 500. We regularly advise directors, shareholders and business owners facing insolvency-related investigations and claims, combining technical legal expertise with commercially focused advice. Clients choose us because we offer:

Our commercial dispute resolution team is recognised by leading independent legal directories for its expertise in complex commercial litigation. We regularly advise directors, shareholders and business owners facing insolvency-related investigations and claims.
Specialist expertise in commercial litigation and insolvency disputes
Strategic advice tailored to the facts of each case
Experience defending claims brought by liquidators and administrators
Practical guidance on managing director liability risks
Strong negotiation and dispute resolution capabilities
Representation in High Court and insolvency proceedings
Access to a full-service legal team able to advise on related corporate, regulatory and employment issues

We understand that claims brought by liquidators and administrators can have significant financial, professional and reputational consequences. Our insolvency disputes and commercial litigation specialists work closely with directors, shareholders and business owners to protect their interests, minimise disruption and achieve the most effective and commercially sensible outcome.

Frequently asked questions

Claims may be brought against current and former directors, shadow directors, de facto directors, shareholders, connected parties and others who are alleged to have received company assets or contributed to losses suffered by creditors.

Common claims include wrongful trading, misfeasance, breach of fiduciary duty, unlawful dividends, transactions at an undervalue, preferences and fraudulent trading.

A misfeasance claim is an allegation that a director or officer has breached their duties, misapplied company money or assets, or otherwise acted improperly in relation to the company’s affairs.

The defence will depend on the facts of the case. Potential arguments may include demonstrating that decisions were made reasonably, that duties were complied with, that losses were not caused by the conduct alleged, or that the claim is unsupported by evidence.

Wrongful trading occurs where directors continue trading after they knew, or should have known, that insolvency was unavoidable and fail to take appropriate steps to minimise losses to creditors.

An unlawful dividend is a dividend paid otherwise than in accordance with company law requirements, typically where there were insufficient distributable profits available at the time of payment.

Potentially, yes. Information uncovered during a liquidator’s investigation may be referred to the Insolvency Service and could result in separate director disqualification proceedings where misconduct is alleged.