Directors’ Duties and Insolvency Recovery Claims

Civil Litigation & Dispute Resolution
Jul 13 2026

When a business collapses, creditors are often left holding the risk. In many cases, bankruptcy and insolvency issues can leave creditors facing significant losses with limited prospects of recovery.

It is hard to accept being told there is nothing left, especially when the story does not fit and you suspect decisions were made that pushed loss onto others.

What these claims are

Insolvency recovery claims, including claims arising from business insolvency, are usually brought by liquidators or, in some cases, supported by creditors seeking to recover losses for the benefit of the company and its creditors. They can include claims that directors allowed trading when the business could not pay its debts, failed to meet core duties, or caused loss through transactions that should be unwound.

These claims are often document-led, based on financial statements, bank records, board decisions, and the timeline of trading. That evidence base can make the merits clearer earlier than in many other disputes.

When people pursue them

Liquidators and sophisticated creditors usually explore these claims as part of a wider restructuring and insolvency process, when there is a clear gap between company debts and recoverable assets, when there are signs of selective payments or asset movements, or when the company kept taking credit despite obvious distress.

How the process can be made practical

Funding is often the barrier. Creditors may be unwilling to throw good money after bad, and liquidators may not have funds to run a serious claim.

Litigation funding can be available for suitable bankruptcy and insolvency claims, helping creditors and liquidators pursue recovery actions where funding would otherwise be a barrier. Funded proceedings in New Zealand have included breaches of directors’ duties. Funding is provided by an external funder (separate from our firm) in return for an agreed share of any recovery.

Litigation funding sits alongside pro bono work and civil legal aid as tools that support access to justice. Holland Beckett actively works in all three areas, and we work with liquidators and creditors to find a commercially sensible path.

Talk to us

If you are a liquidator, creditor, or business seeking insolvency advice, talk to us early. We can give a pragmatic merits view, map the evidence needed, and discuss whether litigation funding may be available.

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