CLOSE SEARCH
When the liquidators of a construction company pursued claims amounting to circa £950,000.00 against two former directors, Taylor Rose stepped in to mount a robust defence. Our clients walked away with a clear, evidence-backed rebuttal that challenged every allegation head-on.
Our clients, two directors of a long-established construction company, were served with a formal Letter of Claim by the company's joint liquidators. The claims alleged unlawful dividends, salary misfeasance, and preferential repayment of company loans - with a combined quantum ranging from £477,793.00 to £950,568.00. Taylor Rose’s Commercial Litigation prepared a comprehensive response that dismantled each claim on its merits and called for the immediate withdrawal of all allegations. No further action has since been taken by the liquidators’ solicitors.
The company was a successful construction business, incorporated in 2002 and operating profitably for over two decades. Our clients served as company directors and the company consistently generated strong revenues during their tenure - including its most commercially successful quarter ever in Q3 of FY 2023.
However, a sudden combination of external pressures, a downturn in contract awards, delayed project starts, poor weather, and reduced productivity, pushed the company into acute financial difficulty in late 2023. Despite the directors injecting tens of thousands of their own money to keep the business afloat and to secure emergency lending, the company entered liquidation in February 2024.
The liquidators, represented by a major international law firm, pursued three separate claims against our clients:
Unlawful dividends - alleging that dividend payments of up to £839,500.00 were made without proper authority or sufficient distributable reserves
Salary misfeasance - alleging that directors' salaries were improperly increased during the company's final months, valued at £10,242.00
Preferential loan repayments - alleging that the repayment of two business loans totaling £100,826.00 constituted unlawful preferences over other creditors
The claims carried significant personal financial exposure and reputational risk for our clients.
Taylor Rose conducted a detailed forensic review of the company's financial history and the clients’ decision-making processes, particularly when the prospect of insolvency was within reasonable contemplation. Our response addressed each claim individually with documentary evidence and legal authority:
On the dividend claim - we demonstrated that our clients had followed a consistent, long-standing process for declaring and paying dividends across multiple financial years, a process known to, and endorsed by, the company's own chartered accountants. We also corrected a factual error in the liquidators' claim regarding which set of filed accounts were the latest at the time the dividends in question were paid.
On the salary claim - we showed that the decision to adjust salaries was made in early October 2023, at a time when the company's financial metrics gave no reasonable indication of insolvency.
On the loan repayments - we established that our clients acted on an honest belief that repayment was a legal obligation under the relevant credit agreements, a defence supported by established case law.
Our clients received a clear, well-evidenced defence that directly challenged claims worth nearly £1 million. Our Commercial Litigation team’s response not only rebutted the allegations but demonstrated our clients’ consistent honesty, reasonableness, and reliance on professional advisers throughout their tenure as directors. The liquidators were invited to withdraw the claims in full and have since chosen not to pursue the claims further.
If you are a company director facing claims concerning director negligence, insolvency-related claims, or regulatory action, Taylor Rose can help. Our commercial litigation team combines rigorous legal analysis with a pragmatic, results-driven approach.
Get in touch
If you would like to speak with a member of the team you can contact us on:
