Question

Assume that Mr Kenneth Lay, the founder of Enron had provided a loan of £1 million to the company and that following the collapse of the company Mr Lay attempted to recover his money from the company but the liquidator resisted his claim on the ground that there was no difference between Mr Lay and the company since he had overall control over the company and that instead of trying to claim money from the company he should be made liable for its debts.

In the film, Mr Louis Bourget the president of Enron diverted the company's profit into his personal account, destroyed the company's records, and gambled the company's money. Mr Andrew Fastow, the company's Chief Financial Officer created a number of front companies which he uses to defraud Enron of tens of millions of dollars.

Required:

a) Advise on the merits of the liquidator's arguments in British company law, indicating whether or not Mr Lay should be personally liable for Enron's debts.

What is the merits of the liquidator's arguments in Enron's case

b) Advise as to whether any of the senior officers of Enron breached their duties as directors of the company, explaining which duty, if any, they breached under the Companies Act 2006.