3 Mins
When a company is experiencing financial distress, decisions are often made quickly, under pressure and on the basis of imperfect or evolving information. Directors must respond to fast‑moving events, manage multiple stakeholders and, at the same time, remain conscious of their legal duties. If matters later deteriorate and an administrator or liquidator is appointed, those decisions may be scrutinised with the benefit of hindsight.
In our experience, one of the first things an insolvency practitioner will ask is not what decision was taken, but why it was taken, when, and on what information. Contemporaneous board minutes are therefore a critical line of defence. They provide an evidence trail demonstrating that directors acted responsibly, took appropriate advice and made decisions in good faith based on the information available at the time.
In reality, however, detailed minute‑taking does not always happen. In the whirlwind of crisis management, boards may focus on outcomes rather than process, or rely on informal discussions that are not properly recorded. This aide memoire is intended to help directors focus on the key matters that should be captured in board minutes during periods of financial distress.
1. Financial Information Considered
Minutes should clearly record the financial information reviewed by the board. At a minimum, this should include up‑to‑date cashflow forecasts, funding availability, key assumptions, and any material uncertainties. If figures are preliminary or subject to change, that should be noted. Recording the limitations of the information available can be just as important as recording the information itself.
2. Solvency Assessment
The board’s assessment of solvency should be documented, including consideration of the cash flow and balance sheet tests, and whether insolvency is possible or probable. Where conclusions are finely balanced, minutes should reflect that judgement and the factors influencing it.
3. Advice Taken
Any professional advice received (legal, financial, restructuring or accounting) should be recorded, including who the adviser was, the scope of the advice, and whether it was oral or written. If advice is not followed, the reasons for that decision should be noted.
4. Options Considered
Minutes should demonstrate that the board considered alternative courses of action. This may include continued trading, negotiations with lenders or counterparties, seeking additional funding, restructuring, or entering a formal insolvency process. The rationale for selecting (or rejecting) particular options should be clearly set out.
5. Creditor Interests
Once insolvency is probable, minutes should reflect that the board considered the interests of creditors as a whole. This does not require legal language, but there should be evidence that creditor impact was actively discussed and factored into decision‑making.
6. Key Decisions and Next Steps
Finally, minutes should clearly record the decisions taken, any conditions attached to those decisions, and the agreed next steps. Responsibility for actions and timelines should be clearly allocated.
Good board minutes are not about defensive drafting or second‑guessing future outcomes. They are about accurately recording the decision‑making process at the time. When done properly, they provide clarity for directors, transparency for stakeholders, and crucial evidence if decisions are later challenged.
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Last Updated on 14 April 2026