A company has not paid. You suspect misleading statements, reckless conduct or an arrangement involving a director or related entity. Before deciding whom to sue, identify each possible claim and its timing. A claim against a company does not automatically become a claim against its directors, and negotiations do not necessarily preserve it indefinitely.
Hugh Raichlin Attorneys assists with commercial disputes, creditor claims and insolvency-related advice. Early assessment should establish the documents, the correct defendant and the facts that may start, interrupt or otherwise affect prescription.
Separate the legal foundations
A contractual debt, a suretyship, a damages claim and a statutory liability claim may require different allegations and evidence. Do not rely on the word “director” as proof of personal responsibility for every company obligation.
Identify who signed, in what capacity, and what was promised. Was the creditor dealing with the company, a person in a personal capacity, a trustee or an agent? Documents using several related trading names need careful reconciliation before process is prepared.
Do not wait for certainty about every legal argument
The source article discussed prescription and a claim seeking personal liability for corporate debt. Its central warning is practical: the date on which a claimant learns enough of the material facts can matter even if the claimant only later receives advice about their legal significance.
Knowledge, discoverability, the date a debt becomes due and possible interruption or delay are fact-sensitive issues. Do not assume that every claim has one identical three-year clock, or that describing conduct as fraud automatically postpones every deadline. A demand letter or ongoing discussion is not a substitute for advice on the step actually needed to protect the claim.
Build the chronology around documents
For each proposed defendant, record what happened and when you knew it. Distinguish suspicion from information you possessed, and retain the material on which that information was based.
- The agreement, invoices, guarantees and suretyships.
- Payment dates, defaults and acknowledgements.
- Representations made before or after the transaction.
- Correspondence revealing the identity or role of relevant parties.
- Company, trust or asset records obtained and the dates obtained.
- Demands, existing summonses, service records and settlement communications.
A spreadsheet can assist, but it should point to the supporting document. Avoid a chronology that changes the date of knowledge simply because a later conversation made the consequences clearer.
Personal liability requires its own case
A director may face liability on an appropriate factual and legal basis. That possibility does not justify automatically adding every director to a claim or threatening criminal proceedings to obtain a civil payment.
Ask what conduct is relied upon, what duty or undertaking is relevant, and how loss is connected to it. The appropriate relief, forum, standing and timing may differ from ordinary contractual recovery. A strong company-debt file is not necessarily a complete personal-liability file.
Consider recovery and insolvency together
A judgment is valuable only in context. Obtain advice about the debtor’s position, security, enforceable undertakings and the implications of liquidation or business rescue. Those procedures should not be threatened merely because their names sound forceful; eligibility and the purpose of the remedy matter.
Where settlement is realistic, document it carefully and assess how it affects existing claims. Do not allow a proposed instalment plan to obscure a deadline or substitute an uncertain debtor for the party actually liable.
Questions creditors ask
Does a demand stop prescription?
Do not assume that it does. The relevant legal step depends on the claim and facts. Obtain advice before relying on correspondence alone.
Can we sue directors because the company cannot pay?
Inability to pay does not, by itself, establish personal liability. A separate contractual, statutory or other recognised basis and supporting facts are needed.
What is the most useful first instruction?
Provide the agreements, a payment schedule and a dated chronology immediately. HRA can assess the possible claims, identify missing information and advise on steps appropriate to protect and pursue the matter.
Related legal assistance
General information, not legal advice on a particular matter. The documents, facts and applicable law determine the appropriate next step.