On 24 November 2025, the UK Supreme Court delivered an important decision reinforcing the strict fiduciary obligations owed by directors once a company enters liquidation. In Mitchell and another (Joint Liquidators of MBI International & Partners Inc (in liquidation)) v Sheikh Mohamed Bin Issa Al Jaber (No 2) [2025] UKSC 43, the Court unanimously held that a director who transfers company assets after liquidation, without proper authority, is liable to compensate the company for the full value of the loss.

 

Background

 

MBI International & Partners Inc entered liquidation in 2015. In 2016, after liquidation had commenced, Sheikh Mohamed Bin Issa Al Jaber caused the transfer of 891,761 shares from MBI to a related entity, JJW Guernsey. The joint liquidators challenged the transfer, alleging breach of fiduciary duty.

 

At first instance, the trial judge found that the transfer was unlawful and ordered Sheikh Al Jaber to pay equitable compensation of €67.1 million, representing the value of the shares at the date of transfer. That decision was later overturned by the Court of Appeal, which accepted arguments that the company had suffered no real loss because the shares were said to be subject to unpaid vendor’s liens.

 

Supreme Court’s decision

 

The Supreme Court allowed the liquidators’ appeal and restored the trial judge’s ruling in full. The Court held that:

• Directors’ fiduciary duties continue after liquidation, but are owed to the company acting through its liquidators.
• The shares were not subject to unpaid vendor’s liens, and there was no basis for concluding that the company’s loss was reduced or eliminated.
• Where a fiduciary wrongfully disposes of company property, loss is assessed at the value of the asset at the date of the breach, not by reference to later events.
• A fiduciary cannot rely on subsequent developments to escape liability unless there is clear evidence that those events were caused by something other than the breach.

The Court emphasised that equitable compensation is designed to restore the company to the position it would have been in had the breach not occurred, applying a strict approach to causation in cases involving fiduciary misconduct.

 

Why this matters

 

This judgment sends a clear message to directors, shareholders, and those exercising control over companies in financial distress:

 

Once liquidation begins, directors’ powers are severely restricted, and unauthorised dealings with company assets will attract personal liability.

 

Courts will take a robust approach to compensation where fiduciary duties are breached, particularly in an insolvency context.

 

Arguments that a company suffered “no loss” will be closely scrutinised and will not succeed without compelling evidence.

 

Key takeaway

 

The Supreme Court’s decision of 24 November 2025 reinforces the high standards imposed on fiduciaries and strengthens the hand of liquidators seeking recovery of misapplied assets. For directors and controllers of companies in distress, the case underlines the importance of obtaining proper legal advice before taking any action involving company property after insolvency.

 

How we can help

 

If you are a director of a company facing insolvency or liquidation, and require advice on your duties, potential personal exposure or representation in any dispute arising from that process, our team can provide clear, strategic guidance to help protect your interests.