Directors' Duties to Creditors - Mapping the Twilight Zone
Abstract
This thesis examines Canadian corporate law to analyze whether its legal mechanisms (e.g., duty of loyalty, duty of care, derivative action, oppression etc.) are sufficient to protect creditor interests, their shortcomings and possible solutions. It argues that the risks to which creditors are exposed in Canada at the hands of directors when a company is financially distressed or insolvent demand more clear protection. It reviews available legal mechanisms under the English and Delaware corporate law to see if Canada could import anything to improve its lax creditor protection. The thesis suggests adopting wrongful trading provisions modeled on English legislation. The study examines and compares relevant legislation, leading case law, theoretical foundations and doctrinal legal scholarship and provides policy perspective.