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Joshua, Lawyer
Category: Law
Satisfied Customers: 26070
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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Can a third party debt be taken out against a company director

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Can a third party debt be taken out against a company director in order to recover a debt against a company?
Hello and thank you for your question. I will be very pleased to assist you. I'm a practising lawyer in England with over 10 years experience. May I ask in what way the director is liable to the company please? Has a judgement been obtained by the company against him?
Customer: replied 2 years ago.

Judgment has been gained by the Claimant against the Company. The Company director has been paying the Companies legal fees throughout the proceedings.

Thank you for the clarification. So to be absolutely clear the position is that the claimant has obtained a judgement against the company and you wish to understand whether the claimant can seek to enforce the judgement against a director personally and seek to recover monies due under the judgement from a director of the company personally? Is that correct?
Customer: replied 2 years ago.

In effect yes. Sadly corporate veil prevented proceedings against the Director at 1st Instance. The Court would not take arguments under Jones .v. Lipman (1962) as to the Director's liability.

Thank you. Generally a director will not have personal liablility for the company unless he can be shown to be guilty of fraud or unlawful trading - trading the company knwoing it to be insolvent. There are some other limited exceptions which rarely apply.Unless you can demonstrate an exception which will generally be based around fraudulent behaviour, the judgement does not bind the director and accordingly not enforcement action can be taken against the director personally in respect of the debt. If you believe the director will wish to keep the company and is not prepared to see the company wound up in order to avoid debt due, you could consider serving a statutory demand upon the company which is a warning that unless the debt is paid within 21 days the company may be wound up. This can be an effective weapon to encourage slow debtors to pay what is owed without further delay but of course will do little good if the owner or owners of the company are willing to wind the company up in order to avoid the debt. I hope the above is of assistance though I am sorry it may not be exactly what you had hoped to hear? If you have no further questions for now I should be very grateful if you would kindly take a moment to click to rate my service to you today or just reply back to let me know if the above is helpful. Your feedback is important to me. If there is anything else I can help with please reply back to me I'd be very grateful
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