Own­ers of col­lapsed firms given wider scope to seek re­dress

The Daily Telegraph - Business - - Business -

Busi­ness own­ers whose com­pa­nies have col­lapsed are set to be able to di­rectly sue wrong­do­ers in­volved in the col­lapse, fol­low­ing a Supreme Court rul­ing, writes Rachel Mil­lard.

For decades the rule against re­flec­tive loss has pre­vented share­hold­ers from mak­ing an in­di­vid­ual claim out­side of the for­mal in­sol­vency process. But in a key case, Supreme Court judges found that the rule did not ap­ply to claims made by cred­i­tors or guar­an­tors.

That paves the way for busi­ness own­ers who pro­vided loans and per­sonal guar­an­tees to the com­pany to make a claim. The rul­ing was made af­ter an ap­peal brought by Marex Fi­nan­cial, which had been pre­vented from re­cov­er­ing debts from a busi­ness owner.

The all-party group on fair busi­ness bank­ing had in­ter­vened in the case to ar­gue for greater pow­ers for busi­ness own­ers. It had raised the ex­am­ple of busi­nesses harmed by RBS’s dis­graced GRG unit.

Toby Starr, of law firm Humphries Ker­stet­ter, said: “The de­tail of this judg­ment will lead to a re­view of many lower court de­ci­sions and will en­able cred­i­tors who have lost out to con­sider bring­ing claims at the High Court.”

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.