In today’s post-pandemic insolvency landscape, liquidators aren’t just combing through old ledgers and company accounts. They’re digging into inboxes, device metadata, cloud logs, and messaging apps. Misfeasance claims are no longer built solely on poor accounting records. Instead, they are often constructed using digital forensics to track intent, influence, and misconduct.
Directors should understand that everything leaves a trace, and those traces increasingly shape the outcome of investigations and claims.
What Is a Misfeasance Claim?
Under Section 212 of the Insolvency Act 1986, a misfeasance claim allows a liquidator to seek compensation from a director (or shadow director) who has:
- Misapplied or retained company money or assets
- Breached fiduciary duties
- Engaged in wrongful conduct causing loss to creditors
Traditionally, these claims relied on bank statements, board minutes, and financial reports. In 2025, the approach is far more sophisticated.
The Digital Shift in Director Investigations
With cloud-based finance systems, remote work, and digital communications now the norm, liquidators are working closely with forensic accountants and IT specialists to:
- Recover deleted emails, spreadsheets, and messages
- Reconstruct timelines of decision-making
- Attribute responsibility based on digital fingerprints
This makes informal decision-making, off-the-record chats, and poorly documented actions far riskier than before.
Five Ways Digital Forensics Is Now Used in Misfeasance Cases
1. Email Chains That Contradict Board Minutes
Liquidators often uncover internal emails that reveal the real reasoning behind decisions, especially dividend payments, asset sales, or repayments to connected parties.
Example: A board minute might record a dividend as “approved unanimously,” but email threads may show concern over cash flow or direct advice to delay the payment. This can support claims of recklessness.
2. WhatsApp, Signal, and Slack Logs
Informal channels are fertile ground for liability. Many directors discuss major decisions in private group chats that feel personal but are admissible evidence.
Legal Note: Courts are increasingly accepting screenshots and exported logs as part of misfeasance proceedings, especially where decision-making clearly took place on those platforms.
3. Metadata from Cloud-Based Documents
It’s not just what was said, but when and by whom. File metadata (such as author names, timestamps, and version histories) can reveal:
- Who created or modified a document
- Whether documents were backdated or altered
- When financial statements or valuations were actually prepared
This is particularly relevant in last-minute director loans, asset transfers, or pre-liquidation restructures.
4. Bank Login and Transaction Patterns
Forensic tracing of who accessed online banking and approved transfers can be used to identify which directors actioned questionable payments, especially if multiple users share credentials.
Risk Alert: Directors who allow others to make payments on their behalf without proper oversight may still be held liable under joint decision-making principles.
5. Cloud File Access Logs
Liquidators often subpoena access logs from Dropbox, Google Drive, or Microsoft OneDrive to prove:
- Who accessed key financial documents
- When they viewed or downloaded specific files
- Whether sensitive documents were accessed just before insolvency
This is particularly useful in proving intent and foreknowledge, which are key elements in high-value misfeasance claims.
Real-World Impact: How One Director Lost £270,000
In a recent UK misfeasance case, a former director was ordered to repay £270,000 in unlawful dividends. The key evidence was a combination of:
- A WhatsApp message showing he knew the company could not meet payroll
- A board pack metadata log proving the solvency statement was created after the dividend was approved
- A series of cash transfers tied to his personal expenses via shared banking access
Without this digital trail, the claim may have failed. Instead, the court found the director knowingly acted against the interests of creditors.
What Directors Should Do Now
Insolvency investigations are no longer limited to hard-copy files or official emails. To protect yourself:
- Avoid using personal devices or private channels for company business
- Document key decisions in formal minutes, backed by real evidence
- Review your company’s digital footprint, including file access, communications, and user permissions
- Seek advice early if you are concerned about actions taken during financial distress
Misfeasance claims in 2025 are built like criminal investigations: layered, digital, and meticulous. Directors who underestimate the power of digital forensics often find themselves blindsided.
At IL Advisory, we help directors assess their exposure, preserve their reputation, and defend their decisions with clarity and confidence.
Need Help Responding to a Misfeasance Investigation?
If you’re worried about digital evidence being used against you or want to strengthen your defensive position, speak to IL Advisory today.
- Confidential support for directors under scrutiny
- Insight into modern liquidator strategies
- Clear action plans to protect your position
Call 020 7692 8456
Or email info@iladvisory.co.uk