Posted: 10 May, 2019
On 8 May 2019 the TMA enjoyed the hospitality of leading international law firm Herbert Smith Freehills.
Delegates enjoyed a presentation from Herbert Smith Freehills partners Kevin Pullen and John Chetwood, complemented by a case study from Anthony Place and Ben Paice from boutique turnaround practice THM.
The discussion focussed on the duties of directors involved in the management of financially distressed businesses and how they should act so as to avoid future criticism and potentially liability. It was apparent from the presentations that the main considerations of any board dealing with a turnaround situation are:-
- The quality of the information available to directors;
- Early engagement with key stakeholders (particularly those who may be funding the project);
- Seeking advice from appropriate professionals;
- Being realistic;
- Making decisions in a timely fashion.
Most of all, directors in a turnaround have to be aware that they will owe duties to the creditors of the company if they know or ought to know that the company is likely to become insolvent. It was the opinion of the panel that , with government pressure on some directors of high profile failures and a greater regulatory burden on boards that litigation on this issue was likely to increase, and that unwary, ill advised and inexperienced directors of distressed businesses could find themselves exposed.
The discussion was then followed by a lively Q&A session from the delegates.
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