Picture this. There are two directors – one responsible for the day-to-day operations of the business while the other managed all contractual matters and the bookkeeping. A dispute arises between the directors, trust rapidly dissipates and accusations start flying.
The above is not an all too untypical scenario PBC have witnessed, whether that is while using our mediation services or a precursor to the company entering into an insolvency event, usually as a result of the management dispute being irreconcilable.
The courts will show little (if any) remorse towards a director who demonstrates a failure to meet their statutory duties as they adopt the stance that duties prevail over any personal feelings or negative impact meeting those duties may cause. The latest demonstration of the court’s views was on 8 March 2024 when, in the case of Manfuku London Ltd and Cocoro Restaurants Limited [2024] EWHC 457 (Ch) the court held a director personally liable for costs.
The main issue in the above case was surrounding access to company records, held by one of the directors but also had wider disputes including allegations of theft. The court refused to consider the wider disputes and ordered for the records to be delivered up, as these could be easily produced.
The key message, here, is should a management dispute arise, take advice at the earliest opportunity. Not seeking that early resolution can be very costly on several levels.
If you need any advice or assistance on a management dispute or any corporate restructuring or insolvency-related issue, then please contact PBC Business Recovery & Insolvency to discuss your situation on 01604 212150 (Northampton), 01908 488653 (Milton Keynes) or email to enquiries@pbcbusinessrecovery.co.uk. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.