Directors’ Declarations of Solvency – A Cautionary Tale

Summary

In a recent case of the High Court of England and Wales (LRH Services Limited (in liquidation) v Trew and Others [2018] EWHC 600 (Ch)), a solvency statement given by the directors of LRH Services Limited (the “Directors”) was deemed invalid because sufficient inquiries had not been made into the affairs of the company. It was also determined that the Directors had failed to act in the company’s best interest. In light of these factors, the Directors were found personally liable for the £21 million debts of the company.