Essay - Company law module Documentary Film - Enron: The Smartest Guys in the Room (2005)

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.

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.

Question

"Section 39 of the Companies Act 2006 simply brings to an end the troublesome history of the ultra vires doctrine. Section 40 on the other hand, is still alive with issues of interpretation and the difficult task of balancing competing interests."

Discuss the accuracy of this statement.

Oscola refrencing

Attachment:- Case.zip