Directors’ duties highlighted by liquidator report in Ireland

Zara West and Aisling Doran of Pinsent Masons in Dublin were commenting after liquidators of DK Windows and Doors reported the company for alleged insolvent trading to the Corporate Enforcement Authority (CEA) in Ireland. DK Windows refutes the claim, according to a report by the Irish Times.

Insolvent trading is a term used to describe where a company continues to operate despite being unable to pay its debts as they fall due. In Ireland, company directors can face potential penalties if insolvent trading amounts to either reckless or fraudulent trading under the Companies Act 2014.

DK Windows ran a ‘Black Friday’ promotion shortly before it stopped trading in December 2024. According to the Irish Times, part of the liquidators’ report to the CEA concerned that promotion. The newspaper cited conflicting evidence from the liquidators and the company’s accountant relating to the extent of the company’s assessment of the financial impact of the promotion.

West said: “This case highlights the principle that, once a company enters the ‘zone of insolvency’, directors’ fiduciary duties begin to shift. While directors ordinarily act in the interests of the company and indirectly its shareholders, where insolvency is likely they are required to have regard to the interests of creditors.”

“The referral to the CEA reflects a broader enforcement focus on director conduct in distressed companies. Recent CEA prosecutions have included proceedings against directors for failing to maintain adequate accounting records, reinforcing the expectation that directors must be able to demonstrate informed and responsible decision‑making,” she said.

Doran added: “The reference to Black Friday trading is notable in light of recent investigations by Ireland’s Competition and Consumer Protection Commission, the European Commission, and other EU consumer protection authorities into the incorrect display of discounts during Black Friday and Cyber Monday sales. While those investigations focus on consumer protection, the concerns raised in the DK Windows case illustrate how promotional practices may also carry insolvency and corporate governance risks if undertaken without proper financial oversight.”