Legal Updates

Liquidation of a company does not reset the Statute of Limitation period if the grounds for the claim were known before such time

February 3, 2020

A trustee for debenture holders of a company was appointed liquidator and two years later filed a claim against former directors for breach of fiduciary duty and the duty of care 9 to 13 years before the filing of the claim.
The Court held that the directors cannot be sued because 7 years lapsed since the date of the events. The date on which the Statute of Limitations commences to count is the date when an outside party could "move" the claim wheels such as the date in which debenture holders or the trustee on the debentures or any of them could have discovered the facts necessary for the cause of the claim and not the date when the said ability was exercised. Therefore, even if the company enters liquidation proceedings at a later stage, the entry to liquidation does not reset the statute of limitations.