Fiduciary Duties in Insolvency

Fiduciary duties in insolvency refer to the responsibility of company directors and officials to act in the best interests of creditors when a company is facing financial trouble. Unlike during normal operations, where their duty is to shareholders, once insolvency is imminent, their priority shifts to maximizing returns for creditors, such as lenders and suppliers. This means making decisions that protect the creditors' rights and assets, avoiding actions that could harm their ability to recover debts. Essentially, they must act honestly, prudently, and prioritize creditors’ interests over personal or other benefits during insolvency.