A Shift in the Duties of Directors when the Company is on the Verge of Bankruptcy

Abstract

The topic of this study is the change of directors' duties with the change of corporate operation status. The main research jurisdiction is the UK, and the main research node is after the company is on the verge of bankruptcy and enters bankruptcy proceedings. The UK law stipulates the general duties of directors in the Companies Act 2006. In the normal operation of the company, promoting the success of the company and protecting the interests of shareholders is almost an accepted fact in corporate law circles. But when a company faces bankruptcy, the duties of directors often change. The UK bankruptcy law stipulates Wrongful trading and fraudulent trading liability to urge directors to consider protecting the interests of creditors when the company is on the verge of bankruptcy. Directors may be legally liable for damage to the interests of creditors due to some improper behaviours. Therefore, in order to avoid being charged, directors will increase the priority of protecting the interests of creditors when the company is near bankruptcy. This study will rely on the relevant provisions of the Company Law 2006 and the enterprise bankruptcy law to analyse the change of directors' duties.