Should Directors Consider Creditors' Interests When A Corporation Is Near Insolvency?

Overview

In a recent landmark case, the United Kingdom Supreme Court held in BTI 2014 LLC v. Sequana SA & Ors, [2022] UKSC 25 that directors of a corporation owe a fiduciary duty to creditors when a corporation is at or near insolvency. Sequana SA is inconsistent with the decisions of the Supreme Court of Canada in Trustee of People's Department Stores Inc. v. Wise, 2004 SCC 68 and BCE Inc. v. 1976 Debentureholders, 2008 SCC 69. In those cases, the Supreme Court of Canada held that directors do not owe a fiduciary duty to creditors when a corporation is in the "vicinity of insolvency." It remains to be seen whether the reasoning in Sequana SA may lead the Supreme Court of Canada to reconsider Peoples and BCE.