Vol 20 (2023) - Issue 1

Article preview

Director’s Duties and Insolvency: Sequana – An Offshore Perspective

Synopsis
The UK Supreme Court's judgment in the case of BTI 2014 LLC v Sequana SA & Ors [2022] UKSC 25 (Sequana) is a landmark decision of significant importance in the arena of company law and directors' duties.
It provides welcome clarification from the UK's highest court on issues that are of key importance to directors of companies in financial difficulty, addressing:
– the existence, application and scope of the socalled 'creditor duty',
– the circumstances in which the otherwise lawful approval of a distribution might give rise to liability, and
– the scope of the doctrine of shareholder ratification.
This note briefly summarises the decision and provides insight into its likely application by the courts in Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey and Jersey, noting the ways in which the respective statutory regimes in place in those jurisdictions differ in important respects from the UK's company legislation, particularly in relation to the approval of distributions.