Corporate Failures and Directors’ Duties: Towards a Paradigm of Financial Stakeholding

Okanigbuan, F ORCID: 0000-0002-7745-134X Corporate Failures and Directors’ Duties: Towards a Paradigm of Financial Stakeholding. Delaware Journal of Corporate Law. (Accepted)

Preview

Text Corporate Failure and Directors’ Duties Towards a Paradigm of Financial Stakeholding.pdf - Accepted Version Available under License Creative Commons Attribution. Download (408kB) | Preview

Abstract

By reference to the financial stakeholding analytical framework, this article challenges the capacity of directors to ensure that creditor interest is not undermined whilst promoting the interests of shareholders when an entity is undergoing financial challenges. In the United Kingdom and Delaware, directors’ duties are required to be exercised in furtherance of shareholder interests. This is justified since shareholders are financial stakeholders. However, since the financial stakeholder platform is jointly shared with creditors, it is equally justifiable to protect creditor interests, especially unsecured creditors. The article argues that the recurrent corporate failures and exposure of unsecured creditors to risks indicate the limited capacity of directors to preserve creditor interests whilst promoting shareholder interests when an entity encounters financial challenges. Therefore, it suggests that a designated independent non-executive director INED should be required to lead the role of preserving creditor interests when an entity encounters serious financial challenges.

Item Type:	Article
Uncontrolled Keywords:	corporate failures; creditors; directors’ duties; financial-stakeholding; independent non-executive director; insolvency; shareholders; 1801 Law; 4801 Commercial law; 4803 International and comparative law
Subjects:	H Social Sciences > HG Finance K Law > K Law (General)
Divisions:	Justice Studies (from Sep 19) Law
Publisher:	Widener University Delaware Law School
Date of acceptance:	2 June 2025
Date of first compliant Open Access:	18 August 2025
Date Deposited:	18 Aug 2025 10:06
Last Modified:	18 Aug 2025 10:15
URI:	https://researchonline.ljmu.ac.uk/id/eprint/26942

View Item