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14 Wrongful Trading—Liability of Lenders as Shadow Directors

From: Principles of Lender Liability

Parker Hood

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved.date: 20 September 2021

Subject(s):
Issue and trading of securities — Legal proceedings and monetary obligations — Liquidated and unliquidated monetary obligations — Bank resolution and insolvency — Shadow directors
14.01 When a corporate borrower experiences trading difficulties, such as the loss of a valuable customer, the decline of a market, cash flow problems,1 or the refusal of a creditor to provide further supplies,2 a lender will, normally, wish to monitor that borrower’s position closely, and, in particular, its receipts and outgoings. This is because these types of difficulties affect a borrower’s capacity to generate income, and so repay the loan made to it by the lender. If the monitoring (or, as may be the case, an investigation by accountants) indicates that the...
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