Associate, Chloe Shilton recently achieved a settlement of £60,000 for her clients by successfully setting out a claim in misfeasance against the director.
Our clients were appointed joint liquidators of a large consulting firm in the medical technology sector. The firm's core business was advising pharmaceutical technology firms in the United States.
During their investigations, the liquidators discovered a number of transactions that appeared unusual. Chloe meticulously identified a series of dividend payments that were incorrectly declared and used to repay the directors' loan account at a time when the company did not have distributable profits available.
A dispute arose when the director sought to argue that the payments were in fact salary and incorrectly labelled as dividends. However, Chloe strongly set out the basis of the claim, along with highlighting that the statutory procedure for declaring dividends was not followed and therefore comprised of unlawful dividends.
Chloe's astute analysis of the company's financial position at the time of the transactions, paired with her sound application of the Companies Act 2006 resulted in a comprehensive and clear case of misfeasance. In allowing and causing the company to make the payment of dividends and subsequently repaying the directors' loan account, the director clearly breached their fiduciary duties under the company.
After a period of negotiation, Chloe was able to reach a successful settlement on behalf of her clients, which had the effect of restoring the company to the position it would have been, but for the unlawful dividends.
