On 5 October 2022, the UK Supreme Court delivered its long-awaited judgment in BTI 2014 LLC v. Sequana SA and others [2022] UKSC 25 (“Sequana Case“) which concerns the question of the trigger point when directors must have regard to the interests of creditors (“Creditor Duty“). This case raised questions of considerable importance for Malaysian company law.
The UK Supreme Court in the Sequana Case considered for the very first time, the existence, content, and engagement of the Creditor Duty. The Supreme Court effectively confirmed the existence of the Creditor Duty in the arena of insolvency and held that the Creditor Duty is engaged when the directors know, or ought to know, that the company is insolvent or bordering on insolvency, or that an insolvent liquidation or administration is probable.
In this Update, we summarise the legal issues and decision of the UK Supreme Court and discuss the possible impact of the Sequana Case for Malaysian companies.
For more information, click here to read the full Legal Update.
