Governance of Distressed Firms
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Governance of Distressed Firms

  • Corporations, Globalisation and the Law series

David Milman

The concept of a distressed firm covers businesses that are struggling, but have not yet entered formal insolvency, as well as those businesses that are undergoing a formal insolvency process. With reference primarily to English law, this study encompasses both limited liability companies and limited liability partnerships with a focus on the regulation both of company directors and insolvency practitioners. It offers recommendations for improvements in governance mechanisms and notes that many of the governance shortfalls that occur can be related to the ease of access given to those who wish to trade with the benefit of limited liability.
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Chapter 3: Governance in the twilight zone

David Milman

Extract

The basic theme of this chapter will be to examine how the aforementioned general principles of corporate management/governance mutate once a firm becomes insolvent (or doubtfully solvent), even though no formal insolvency proceedings have actually been commenced in respect of it. Particular emphasis will be placed upon the implications of the introduction of s. 172 of the Companies Act 2006 (an innovation in UK corporate law) into this environment.

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