Source: All England Reporter
Publisher Citation: [2006] All ER (D) 135 (Sep)
Court: Chancery Division (Companies Court)
Judge:

Paul Girolami QC sitting as a Deputy Judge of the High Court
Representation Angus Burden (instructed by Tollers) for the claimants.
  The first defendant appeared in person.
  Cameron Maxwell Lewis (instructed by Clapham Collinge) for the second defendant.
Judgment Dates: 28 September 2006

Catchwords

Company - Director - Debt due to company - Directors taking interest free loans from company - Directors issuing dividend to extinguish debt - Company entering voluntary liquidation - Whether directors validly declaring dividend - Whether directors jointly and severally liable - , ss 330, 341.

The Case

In a case where the directors of a company had taken interest free loans from that company, had purported to have validly declared a dividend to extinguish the liability for those loans, and the company's liquidators sought the repayment of those loans, the court held that the dividend had not been validly declared, and that, in the circumstances of the instant case, the defendants were jointly and severally liable for the amounts owed.

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