The Impact of Sequana on the Directors’ Obligation to Consider Creditor Interests in Financially Distressed Companies: Was it Worth the Wait?

In many Commonwealth jurisdictions, including Australia and the
\nUnited Kingdom (‘UK’), it has been established that, as part of their duty
\nto act in the best interests of the company, directors have an obligation to
\nconsider the interests of their company’s creditors when their company
\nis in some form of financial distress. In October 2022, the UK Supreme
\nCourt delivered its long-awaited judgment in BTI 2014 LLC v Sequana
\nSA on this issue. This judgment, which was lengthy and wide-ranging,
\nwas the first one handed down by the most senior court in the UK on the
\ntopic. Undoubtedly, because of the seniority of the Court and the fact that
\nthe judgment is wide-ranging, the case will be cited in many subsequent
\ncases in various jurisdictions that have to rule on whether directors are in
\nbreach of the obligation. This article analyses the impact of the judgment
\non the law as it relates to the directors’ obligation and asks whether the
\nwait for the judgment was worth it. Does the decision add anything to the
\nlaw that we have on the obligation, and if so, what? Or does the judgment
\nleave stakeholders still floundering when it comes to the critical issues
\nthat have been raised in relation to the obligation?