The Corporate Law Assignment

Added on -2020-02-24

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Running head: CORPORATE LAW Corporate LawName of the studentName of the universityAuthor note
1CORPORATE LAWCase 1 Living the Link Pte Ltd (in creditors’ voluntary liquidation) and others v Tan Lay TinTina and others [2016] SGHC 67FactsThe directors of a company has prepared payment while the company was in liquidation foranother company preparing it over the other creditors of the company. IssueThe issue in this case was to determine whether the directors of such company could be heldpersonally liable for their actionsRuleSection 99(2) of the Bankruptcy Act1 provides the court abroad discretion in appropriate cases tomake an order for partial reversal of transaction adjust to be undue preference if it is required byjustice. An order could be justified under this section in cases where the parties make anuncontroversial claim.According to the running account principle defence a transaction which is under preferenceprima faice can be valid based on the fact that it had been concluded under mutually beneficialrunning account. The claim is said to be uncontroversial where there is a clear agreement between the liquidatorsand the creditors in relation to the amount to be set aside for claims of the unsecured parties.1 Bankruptcy Act 1996 at Section 99
2CORPORATE LAWIn the West Mercia Safetywear Ltd, Liquidator of v Dodd2 directors of the company were heldpersonally liable for ensuring and undue preference based on breach of fiduciary.ApplicationThe impugned payment had been made in relation to a running account is not sufficientby itself to provide for a preferable intention as it was not made with the motive of gaining a newvalue for the purpose of keeping the business running. The principle is not an independentdefence strictly but is only applicable when there was no preference by the company in relationto a particular creditor. Directors had fiduciary duties to consider the interest of the company’s creditors at thetime the company is nearing insolvency or becoming insolvent. In such cases it is clear from theapplication of fiduciary duties that a liability to pay such creditors would also exist when nolosses are suffered by the company all no personal benefits was obtained by the directors fromunder preferences.ConclusionDirector who initiated payments from a company in liquidation to an associated companypreferring it over creditors was help personally liable to restore the company to such position itwould have been otherwise for the undue preference transactions.2 (1988) 4 BCC 30

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