Can a director of a bankrupt corporation be held liable for misleading advice given by his professional adviser?
Canada (Federal), Canada
The following excerpt is from Thibault v. The Queen, 2002 CanLII 786 (TCC):
As I see it, this is a case in which the director of the bankrupt corporation may have been misled (if in fact a mistake was made as regards the possibility of an election under the Act, which I do not have to decide here) by his professional adviser, which is something for which the appellant cannot be held liable. As stated by Robertson J.A. in Soper v. The Queen, 1997 CanLII 6352 (FCA), [1998] 1 F.C. 124, [1997] F.C.J. 881, at paragraph 53, the positive duty to act arises where a director obtains information, or becomes aware of facts, which might lead one to conclude that there is a problem with remittances. Although that comment was made in discussing the liability of an outside director, I think that it also applies where an inside director could not reasonably be expected to have doubted the possibly mistaken advice given by his or her professional adviser.
"The most advanced legal research software ever built."
The above passage should not be considered legal advice. Reliable answers to complex legal questions require comprehensive research memos. To learn more visit www.alexi.com.
Other Questions
Can a shareholder of a bankrupt corporation bring a claim against the directors of the bankrupt corporation for damages due to their misconduct? ("New York", United States of America)
Can an officer of a bankrupt corporation seek an injunction against the bankrupt? (MultiRegion, United States of America)
Is a corporation that purchases assets of another corporation generally liable for the seller's liabilities? (MultiRegion, United States of America)
What is the test for the purpose of bringing an action against the directors of a corporation for negligence and wrongful performance of their duties as directors? ("New York", United States of America)
Is a shareholder of a corporation entitled to use of the corporation's corporate property for personal use purposes? (Canada (Federal), Canada)
In what circumstances will a corporation be liable for expenses paid by the Corporation to the Defendant's lawyers in an action brought by stockholders against the Defendant? (MultiRegion, United States of America)
What is the current state of the law in which a director of a corporation is permitted to profit from a breach of his duty to the corporation and its stockholders? (MultiRegion, United States of America)
Is a sole director of a corporation an inside director? (Canada (Federal), Canada)
Does a diversion of assigned account receivable checks from a debtor corporation to another corporation controlled by the debtor corporation constitute concealment of assets? (MultiRegion, United States of America)
Does the failure of a director to make a demand for an action against the directors of a company be considered a "defendant" of the company? (MultiRegion, United States of America)
